Updated from 5:32 p.m. EST.
Procter & Gamble's
board approved plans to pursue an acquisition of both
American Home Products
, a person familiar with the situation told
An announcement could come as early as tomorrow, with formal negotiations to begin shortly and a transaction unveiled in as little as a week or two, the wire service said.
source said Procter & Gamble would be interested in a stock swap for the two drug companies.
Spokespeople for P&G and American Home separately declined to comment. A spokeswoman for Warner-Lambert couldn't immediately be reached for comment.
joint newsroom reported
Friday, speculation has raged for the past week that P&G might seek a takeover of Warner-Lambert, American Home or both. Rumors of a pending deal sent P&G's shares tumbling nearly 9% Friday.
After agreeing to a merger in early November with American Home, Warner-Lambert has been locked in a battle with
, which made its own hostile bid for the company. P&G is seen as a possible savior of Warner-Lambert, which reluctantly decided on Jan. 13 to negotiate with Pfizer.
A purchase of American Home and Warner-Lambert would make consumer-products giant P&G one of the world's largest pharmaceutical companies, rivaling the planned merger partners
The deal would be by far the largest acquisition ever for P&G, which makes of Tide detergent, Crest toothpaste and Pampers diapers but now gets only 2% of revenue from pharmaceuticals. Its previous largest buy was last year's purchase of pet-food maker
for $2.3 billion.