The boards of the U.S. rivals were scheduled to hold separate meetings on Sunday to finalize an agreement and an announcement could be made as early as Monday, sources said. One source cautioned, however, that the negotiations could still collapse.

Pfizer could not be immediately reached for comment. Wyeth declined to comment.

The deal would help Pfizer cope with a major gap in revenue in 2011 when its blockbuster Lipitor cholesterol treatment will begin to face U.S. generic competition. Next year, Wyeth loses patent protection on its own top drug, the antidepressant Effexor XR.

Still, buying Wyeth would help Pfizer diversify into vaccines and injectable biologic medicines by adding Wyeth's big-selling Prevnar vaccine for childhood infections and Enbrel rheumatoid arthritis treatment. Pfizer would realize major cost savings by streamlining areas that overlap.

Pfizer Chief Executive Jeff Kindler was expected to head the combined company, sources said. The cash and stock deal was expected to be backed by $25 billion in financing.

Pfizer has struggled after digesting two huge deals in the past decade. Kindler previously has called mega-mergers disruptive and distracting.

Sources previously said Pfizer may pay about $50 per share for Wyeth, but the price may change as negotiations continue throughout the weekend, one source said. At $50 per share, Wyeth would fetch roughly $66.6 billion. Shares of Wyeth closed at $43.74 on Friday, up 12.6 percent.

(Reporting by Jessica Hall, additional reporting by Lewis Krauskopf; Editing by Phil Berlowitz)