Pfizer Not Done With Deals Even After Hospira Purchase: Real M&A
2015-02-05 21:02:35.362 GMT
(For a Real M&A column news alert: {SALT REALMNA <GO>}.)
By Brooke Sutherland
(Bloomberg) -- Pfizer Inc.’s deal aspirations are probably
bigger than Hospira Inc.
Buying the injectible drugmaker doesn’t give Pfizer the
innovative products and lower tax rate that the $208 billion
pharmaceutical giant was seeking in its failed bid for
AstraZeneca Plc last year. Pfizer’s $17 billion bill for Hospira
is just a fraction of the almost $120 billion it was willing to
pay for AstraZeneca, so the New York-based company has plenty of
capacity to go after more targets. Chief Executive Officer Ian
Read said Pfizer continues to look at opportunities.
A deal for Actavis Plc, which is wrapping up its $66
billion purchase of Botox-maker Allergan Inc., could fulfill
Pfizer’s remaining needs, according to Kevin Kedra, a Rye, New
York-based analyst at Gabelli & Co. The company could also look
to further bolster its oncology and vaccine offerings, said John
Boris of SunTrust Banks Inc. Big drugmakers such as
GlaxoSmithKline Plc, AbbVie Inc. and Bristol-Myers Squibb Co.
have also been named by analysts as potential Pfizer targets.
“You don’t go from potentially paying $120 billion for a
major deal to something that’s basically an hors d’oeuvre,”
Boris of SunTrust said in a phone interview. “M&A will continue
to be dominant.”
Cash Balance
Pfizer had $33 billion in cash at the end of September, the
most recent date for which information is available. It’s using
some of that to cover a portion of the cost for the Hospira deal
and issuing new debt to pay for the rest. That will still leave
the company with plenty of resources for other acquisitions.
“I’m not going to sneeze at a $17 billion deal -- it’s a
fairly significant move,” David Heupel, a Minneapolis-based
fund manager at Thrivent Financial for Lutherans, which oversees
about $90 billion, said in a phone interview. “But they
certainly, particularly when you think about ex-U.S. cash, have
plenty of money that they could deploy. This doesn’t necessarily
close the door on any acquisition.”
The Hospira deal will add scale and growth to Pfizer’s
established products business, putting the company in a better
position to eventually spin it off as it has discussed doing.
What Hospira doesn’t offer is a pipeline of innovative products
that could replace Pfizer’s own blockbusters that are losing
patent protections and help reverse four years of revenue
declines.
Actavis Appeal
That could drive Pfizer to a deal with Actavis, Kedra of
Gabelli said. Actavis is in the process of buying Allergan to
add fast-growing drugs including the anti-wrinkle treatment
Botox and Restasis eye-drops. Once it completes the deal, the
Dublin-based company may also be big enough for Pfizer to
overcome the U.S. Treasury’s stricter rules on inversions and
strike a deal to lower its tax rate, Kedra said.
Buying Hospira “checks off some of the boxes they would
have gotten from AstraZeneca but certainly not all of them,”
Kedra said in a phone interview. With an Actavis takeover, “you
would certainly pick up some innovative growth assets,
especially through the Allergan portfolio. That would help check
off a lot of the boxes that still seem to be out there.”
Mylan is also a possibility as the companies already have a
relationship on several projects including EpiPen, though Pfizer
would have to work out the tax implications of a takeover, said
Boris of SunTrust. Mylan is seeking to lower its tax bill by
buying Abbott Laboratories’ generic drugs business in developed
markets and moving its legal address to the Netherlands.
The Hospira acquisition may tip Pfizer’s hand on where it’s
looking for its next deal, Thrivent’s Heupel said.
“There are plenty of assets out there that they could buy
that would provide some revenue and feasible growth to the
existing infrastructure the company has -- I think that’s part
of what this tells us,” he said. “You could run the gamut in
the generic specialty space. I think anything would be feasibly
viewed as on the table.”
For Related News and Information:
Pfizer Flexes Muscle With Priciest Purchase of Decade: Real M&A
Drug Buying Spree Still Bustling as Pfizer Leads Hunt: Real M&A
Real M&A’s 2015 Guide for Deal Watchers: Pfizer to MegaBrew
Pfizer $33 Billion Question Remains After Teva, Actavis Feelers
Top Deal Stories: DTOP <GO>
Real M&A Columns: NI REALMNA <GO>
To contact the reporter on this story:
Brooke Sutherland in New York at +1-212-617-0448 or
bsutherland7@bloomberg.net
To contact the editors responsible for this story:
Beth Williams at +1-212-617-2307 or
bewilliams@bloomberg.net
Elizabeth Wollman
2015-02-05 21:02:35.362 GMT
(For a Real M&A column news alert: {SALT REALMNA <GO>}.)
By Brooke Sutherland
(Bloomberg) -- Pfizer Inc.’s deal aspirations are probably
bigger than Hospira Inc.
Buying the injectible drugmaker doesn’t give Pfizer the
innovative products and lower tax rate that the $208 billion
pharmaceutical giant was seeking in its failed bid for
AstraZeneca Plc last year. Pfizer’s $17 billion bill for Hospira
is just a fraction of the almost $120 billion it was willing to
pay for AstraZeneca, so the New York-based company has plenty of
capacity to go after more targets. Chief Executive Officer Ian
Read said Pfizer continues to look at opportunities.
A deal for Actavis Plc, which is wrapping up its $66
billion purchase of Botox-maker Allergan Inc., could fulfill
Pfizer’s remaining needs, according to Kevin Kedra, a Rye, New
York-based analyst at Gabelli & Co. The company could also look
to further bolster its oncology and vaccine offerings, said John
Boris of SunTrust Banks Inc. Big drugmakers such as
GlaxoSmithKline Plc, AbbVie Inc. and Bristol-Myers Squibb Co.
have also been named by analysts as potential Pfizer targets.
“You don’t go from potentially paying $120 billion for a
major deal to something that’s basically an hors d’oeuvre,”
Boris of SunTrust said in a phone interview. “M&A will continue
to be dominant.”
Cash Balance
Pfizer had $33 billion in cash at the end of September, the
most recent date for which information is available. It’s using
some of that to cover a portion of the cost for the Hospira deal
and issuing new debt to pay for the rest. That will still leave
the company with plenty of resources for other acquisitions.
“I’m not going to sneeze at a $17 billion deal -- it’s a
fairly significant move,” David Heupel, a Minneapolis-based
fund manager at Thrivent Financial for Lutherans, which oversees
about $90 billion, said in a phone interview. “But they
certainly, particularly when you think about ex-U.S. cash, have
plenty of money that they could deploy. This doesn’t necessarily
close the door on any acquisition.”
The Hospira deal will add scale and growth to Pfizer’s
established products business, putting the company in a better
position to eventually spin it off as it has discussed doing.
What Hospira doesn’t offer is a pipeline of innovative products
that could replace Pfizer’s own blockbusters that are losing
patent protections and help reverse four years of revenue
declines.
Actavis Appeal
That could drive Pfizer to a deal with Actavis, Kedra of
Gabelli said. Actavis is in the process of buying Allergan to
add fast-growing drugs including the anti-wrinkle treatment
Botox and Restasis eye-drops. Once it completes the deal, the
Dublin-based company may also be big enough for Pfizer to
overcome the U.S. Treasury’s stricter rules on inversions and
strike a deal to lower its tax rate, Kedra said.
Buying Hospira “checks off some of the boxes they would
have gotten from AstraZeneca but certainly not all of them,”
Kedra said in a phone interview. With an Actavis takeover, “you
would certainly pick up some innovative growth assets,
especially through the Allergan portfolio. That would help check
off a lot of the boxes that still seem to be out there.”
Mylan is also a possibility as the companies already have a
relationship on several projects including EpiPen, though Pfizer
would have to work out the tax implications of a takeover, said
Boris of SunTrust. Mylan is seeking to lower its tax bill by
buying Abbott Laboratories’ generic drugs business in developed
markets and moving its legal address to the Netherlands.
The Hospira acquisition may tip Pfizer’s hand on where it’s
looking for its next deal, Thrivent’s Heupel said.
“There are plenty of assets out there that they could buy
that would provide some revenue and feasible growth to the
existing infrastructure the company has -- I think that’s part
of what this tells us,” he said. “You could run the gamut in
the generic specialty space. I think anything would be feasibly
viewed as on the table.”
For Related News and Information:
Pfizer Flexes Muscle With Priciest Purchase of Decade: Real M&A
Drug Buying Spree Still Bustling as Pfizer Leads Hunt: Real M&A
Real M&A’s 2015 Guide for Deal Watchers: Pfizer to MegaBrew
Pfizer $33 Billion Question Remains After Teva, Actavis Feelers
Top Deal Stories: DTOP <GO>
Real M&A Columns: NI REALMNA <GO>
To contact the reporter on this story:
Brooke Sutherland in New York at +1-212-617-0448 or
bsutherland7@bloomberg.net
To contact the editors responsible for this story:
Beth Williams at +1-212-617-2307 or
bewilliams@bloomberg.net
Elizabeth Wollman