A $68 billion deal which would see Pfizer buy Wyeth could be announced within the next few hours, according to a number of sources.

Friday saw the Wall Street Journal report that a deal was imminent and the New York Times has claimed this morning that the acquisition could be announced later today. The newspaper cites “three people with direct knowledge of the talks” as saying that the boards of the two firms held separate meetings on Sunday to finalise an agreement.

The NYT claimed that the proposed merger, which the firms have been pondering since last spring, almost collapsed at the eleventh hour. It says that the companies agreed to the broad outlines of the deal, and the price, but the issue of a break-up fee had still been a sticking point.

However the newspaper reports that Pfizer has agreed to pay a massive $4.5 billion if it does not complete the deal. The New York-based behemoth’s bid is apparently being financed by four banks that recently received a bailout from the US government – Goldman Sachs, JPMorgan Chase, Citigroup and Bank of America, plus Barclays, according to the sources cited.

Under the terms of the proposed deal, Pfizer would pay $50.19 a share for Wyeth, $33 in cash and the rest in stock. That works out at around a 29% premium on Wyeth’s shares before the WSJ reported the story, and analysts believe this represents a reasonable price.

Buying Wyeth would certainly ease concerns about the patent cliff that Pfizer is staring at, especially in 2011, when its blockbuster cholesterol drug Lipitor (atorvastatin) faces generic competition in the USA. A host of other key drugs will be going off-patent up to 2014, which could add up to lost revenues of about $35 billion.

However, Wyeth’s “comparative lack of a patent cliff could help smooth earnings,” wrote Tim Anderson at Sanford Bernstein in a research report. He noted that a deal could keep Pfizer’s earnings unchanged at $2.69 a share from 2010 to 2015, when patent expiries start to take effect, and that compares to a 68% drop in earnings without the Wyeth acquisition, to $1.40 in 2015. Nevertheless, to achieve that, Pfizer would need to cut 70% of Wyeth’s research, marketing and administrative costs, Mr Anderson added.

Neither company is commenting on the rumours but observers will be glued to their computers and telephones today, waiting for something more substantial.