Weekend Report: Warner-Lambert Ties the Knot With Pfizer, Ditching American Home

Plus, AOL extends its hold in Europe; Vodafone goes ahead with Vivendi deal; and the First Lady officially throws her hat in the ring.
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Like a potential bride who just can't find someone willing to settle down,

American Home Products

(AHP)

watched Sunday as its would-be partner

Warner-Lambert

(WLA)

planned to merge instead with

Pfizer

(PFE) - Get Report

.

Pfizer is expected to announce its acquisition of Warner-Lambert on Monday, pending approval from both boards, sources told

Bloomberg

Sunday. According to

Bloomberg

reports, the deal is valued at $91.4 billion including stock and assumed debt, and will create America's largest drug maker and the second-largest in the world.

American Home, which previously had failed to merge with

Monsanto

(MTC) - Get Report

and

SmithKline Beecham

(SBE) - Get Report

, has agreed to walk away from Warner-Lambert in exchange for $1.8 billion, sources told the

New York Times

and

Bloomberg

over the weekend.

An American Home Products spokesman would not confirm the reports Sunday and declined to comment on the merger.

The breakup fee was specified in the company's initial agreement to merge with Warner-Lambert. Shortly after the two agreed to join in November, Pfizer upstaged American Home with an unsolicited counteroffer of $82 billion.

At first, Warner-Lambert refused to consider Pfizer's bid, but finally caved in last month.

Shares of Warner-Lambert closed Friday up 1 1/16, at 94 9/16, and Pfizer finished up 1/8, at 35 3/4. American Home fell 2 3/16 to finish at 45 1/2.

Representatives from Pfizer and Warner-Lambert could not be reached Sunday.

In Other News

America Online's

(AOL)

borders could soon extend a lot father than its name indicates. The Internet service is in talks to buy out partner

Bertelsmann's

50% stake in

AOL Europe

, the London

Observer

reported Sunday. The negotiations were prompted by AOL's merger with

Time Warner

(TWX)

, which is a competitor of German media giant Bertelsmann, the newspaper said.

Separately, AOL Europe is poised to surpass

Freeserve

as the largest Internet service provider in the U.K. next month, AOL Europe chief exec Andreas Schmidt told the

Sunday Times

.

Last week's record $181 billion merger of European telecom giants

Vodafone

and

Mannesmann

will not jeopardize Vodafone's plans for a European Internet portal with France's

Vivendi

. At least that's according to Vivendi Chairman Jean-Marie Messier, who tells the

Journal du Dimanche

in Paris that he still expects the companies to launch their joint venture by the end of June.

In other M&A news ... Montreal-based

BCE Emergis

announced Sunday it had acquired

United Payors & United Providers

for $580 million. United Payors, based in Rockville, Md., processes claims between insurance companies and health care providers.

Days after a class-action lawsuit was filed in New York against

Sotheby's

(BID) - Get Report

and

Christie's

accusing the pair of fixing commissions, the

Financial Mail

in London reported Sunday that the European Union is investigating the two auction houses. An EU spokesman told the newspaper the probe would focus on the European art market.

An

Alaska Airlines

(ALK) - Get Report

flight made an emergency landing Saturday night after developing problems with its rear stabilizer, the same piece of equipment that gave pilots trouble before last weekend's Alaska Airlines crash off the coast of California. Less than 10 minutes after takeoff, the plane safely returned to Reno/Tahoe International Airport with no injuries to any of its 140 passengers.

In Europe's ever-consolidating defense industry,

BAE Systems

is considering a $2.07 billion bid for

Lockheed Martin's

(LMT) - Get Report

Aerospace and Electronic Systems

unit, the

Sunday Times

reported. BAE is the company formed by

British Aerospace's

purchase of

Marconi

.

Thousands of miles away from the court battle over Web browsers,

Microsoft

(MSFT) - Get Report

is wading into a much more innocuous realm: online gambling.

Bill Gates

has told the

BBC

that his company will provide the software if

Richard Branson

wins his bid to run the U.K.'s National Lottery. Branson wants to reinvigorate the lottery with the help of the Internet, interactive television and mobile phones.

And finally, it's official:

Hillary Clinton

has become the first First Lady to seek public office. She formally announced her candidacy for the U.S. Senate from New York Sunday.

In the Papers

For betting heavily on technology stocks,

Janus

topped

Barron's

1999 fund-family survey. Following it were

Strong

,

Sit

,

Fortis

and

Morgan Stanley Dean Witter

.

Associates First Capital

(AFS)

, a Dallas-based finance company, could become a takeover target if its stock price continues to lag,

Barron's

speculates. The magazine notes that its stock has taken a dive despite the company's strong performance.

Barron's

lists

General Electric

(GE) - Get Report

,

Citigroup

(C) - Get Report

and

American International Group

(AIG) - Get Report

as potential buyers.

Barron's

also features an interview with money managers Mark Bronzo and Daniel Portanova of

Groupama Asset Management

. Their stock picks include

Morgan Stanley Dean Witter

(MWD)

,

Merrill Lynch

(MER)

,

Target

(TGT) - Get Report

,

EMC

(EMC)

,

Nokia

(NOK) - Get Report

,

Medtronic

(MDT) - Get Report

,

Solectron

(SLR)

and

Kimberly-Clark

(KMB) - Get Report

.

Frito-Lay

unnerved its competitors last month when it asked farmers not to sell it genetically modified corn for use in Doritos or Fritos chips, the

Washington Post

reported Sunday. The company, a unit of

PepsiCo

(PEP) - Get Report

, told the newspaper it has merely heeding its customers uncertainties. U.S. food producers as a whole have not buckled to concern over genetically modified crops, although America has not seen the consumer backlash that Europe has.

David Rheingold is a New York-based freelance writer. At the time of publication he was long Pfizer, although holdings can change at any time.