Pfizer the world's largest drug maker by revenue, is in talks to acquire rival Wyeth in a deal that could be valued at more than $60 billion (44 billion pounds), the Wall Street Journal reported on its website, citing people familiar with the matter.
2 comments:
this story is wsj having no better story to fill space.
the deal is far too big and too dilutive both for earnings and shares.
net cost +tax on repatriation of profits to make purchase. could be upwards of 5bn.
short wye
I posted this on nytimes.com and think it's relevant for your comments:
I’m not sure there is a rational business reason for big pharmaceutical company mergers and has been notably supported “The record of big mergers and acquisitions in big pharma has just not been good according to Gary Pisano, a Harvard Business School professor. There’s just been an enormous amount of shareholder wealth destroyed,” Pisano said who has written about the issue.
Admittedly there are contravening forces at play here-Pfizer among others has been notably non-productive in its R&D sector spending over $7.5 billion a year with little tangible payoff—in fact they announced 800+ layoffs for this particular group in the last week or so. On the other hand, Wyeth has had a bit more success with a newly re-engineered R&D organization—having said that, both companies have major blockbusters, Lipitor and Enbrel come from acquisitions, not in house development. Clearly there are enormous “synergy targets” should two such massive businesses merge. Combine these factors with an investment community that is pushing for consolidation, and a lower market cap this year than last mixed together with a cash position of over $25 billion for Pfizer and a market capitalization of just over $50 billion for Wyeth—maybe, just maybe this could happen.
If Pfizer-Wyeth becomes a reality, we enter a new realm of what we call “Super-Mega-Global” Pharmaceutical giants. This may force other merely mega-globals into a merger frenzy. Europe’s big 3, Glaxo, Novartis and Sanofi may view the world in a different way and look in their backyards at the likes of AstraZeneca, Bayer and even Roche as feeding fodder. How about the likes of Merck, J&J, Abbott or BristolMyers looking over the landscape at each other or such potentially delectable morsels as Amgen, ScheringPlough or others or each other or some large generics, or…… You get the point, in an industry known for follow-the-leader mentality, the investment bankers, lawyers and our friends the consultants are in for some major paydays.
We have several other posts at our blog, http://pharmservices.blogspot.com
— Posted by Larry Rothman
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