Pfizer’s Deal Hunt Said to Have Included Rebuffed Teva Approach
2015-01-23 20:58:41.390 GMT
By Cynthia Koons, David Wainer and Manuel Baigorri
(Bloomberg) -- In pursuit of growth, Pfizer Inc. is casting
a wide net that included an approach to Teva Pharmaceutical
Industries Ltd. late last year, people familiar with the matter
said.
The Israeli drugmaker immediately rejected Pfizer’s
overtures, so the contours of a transaction never took shape,
said the people, who asked not to be identified because the
matter was private.
The approach by Pfizer underscores how broad the company’s
search for options has become after failing to strike an almost
$120 billion deal with U.K. drugmaker AstraZeneca Plc last year.
In October, Chief Executive Officer Ian Read said he felt
pressure to do a deal to bulk up the innovative part of the
business. The loss of key patents for blockbuster drugs has left
Pfizer with some revenue holes to fill. “Certainly I feel a
sense of urgency on utilizing our balance sheet and our capital
to do deals that are incremental, add incremental value and
certainly add revenue growth in the innovative space,” Read
said on a conference call with analysts in October. “We are
aggressively looking at all alternatives.”
Press representatives for Teva and Pfizer declined to
comment. Teva is valued at about $50 billion, based on today’s
trading.
While a full-blown takeover of Teva would’ve faced
significant hurdles, Teva’s $9.2 billion-a-year generic drugs
business offers Pfizer a way to beef up its portfolio of off-
patent medicine and give it infrastructure to eventually spin
off into a separate company, three of the people said.
Those products, drugs like Pfizer’s Lipitor that have lost
patent protection but are still well-known brands, require
little additional investment and can generate substantial cash.
Teva makes generic versions of blood pressure drug Diovan, blood
thinner Plavix and antibiotic amoxicillin.
German Partner
The AstraZeneca deal was attractive to Pfizer in part
because of the U.K. company’s oncology pipeline. The proposed
deal would also have let New York-based Pfizer relocate its
legal address overseas, allowing it to lower its U.S. tax bills.
Months after Pfizer dropped its pursuit, the U.S. Treasury
Department imposed rules to limit the tax benefits of so-called
inversion deals. Pfizer’s management hasn’t ruled out doing an
inversion in the wake of those changes.
In November, Pfizer announced a partnership with Germany’s
Merck KGaA, boosting its foothold in oncology by giving it
rights to an experimental drug that’s part of an emerging class
of cancer therapies.
Pfizer is still looking for something to buy after the
failed attempt to acquire AstraZeneca, said people familiar with
the matter. The company has been exploring many ideas, including
talks with Actavis Plc before the company agreed to buy Allergan
Inc., one of the people said.
‘Ample Resources’
For its part, Teva is also looking for deals. The company’s
cash balance provides “ample resources” to look for
acquisitions, Chief Executive Officer Erez Vigodman said in an
investor presentation this month.
Pfizer, the largest U.S. drugmaker, has a legacy of being
an M&A powerhouse. In 2000, New York-based Pfizer paid $116
billion for Warner-Lambert Co.; in 2003 it spent $60 billion for
Pharmacia Corp.; and in 2009 it paid more than $60 billion for
Wyeth LLC -- acquisitions that gave Pfizer blockbuster products
like Lipitor and Prevnar.
Pfizer will probably continue striking deals, in part
because executives have the money to spend, said Damien Conover,
a Chicago-based analyst from Morningstar Inc. The company also
faces pressure to do something because its profit is expanding
relatively slowly, he said.
‘A Lot Left’
“While they do a lot of share repurchases, there’s still a
lot left for them to make acquisitions,” Conover said.
“They’re really motivated to get some growth through some
external collaborations.”
Pfizer should exercise caution in doing deals, said David
Heupel, senior health-care analyst at Thrivent Financial, which
holds Pfizer shares. “I think operationally there are a lot of
positives that are overlooked,” he said. “I’d rather them
execute on that kind of strategy than go out and really stretch
to do a big deal.”
For Related News and Information:
Top Health News: TOP HEA <GO>
--With assistance from Tara Lachapelle and David Welch in New
York.
To contact the reporters on this story:
Cynthia Koons in New York at +1-212-617-5253 or
ckoons@bloomberg.net;
David Wainer in Tel Aviv at +972-3-542-7110 or
dwainer3@bloomberg.net;
Manuel Baigorri in London at +44-20-3525-4457 or
mbaigorri@bloomberg.net
To contact the editors responsible for this story:
Crayton Harrison at +1-212-617-6145 or
tharrison5@bloomberg.net;
Mohammed Hadi at +1-212-617-2914 or
mhadi1@bloomberg.net;
Chitra Somayaji at +44-20-3525-9717 or
csomayaji@bloomberg.net
Drew Armstrong
2015-01-23 20:58:41.390 GMT
By Cynthia Koons, David Wainer and Manuel Baigorri
(Bloomberg) -- In pursuit of growth, Pfizer Inc. is casting
a wide net that included an approach to Teva Pharmaceutical
Industries Ltd. late last year, people familiar with the matter
said.
The Israeli drugmaker immediately rejected Pfizer’s
overtures, so the contours of a transaction never took shape,
said the people, who asked not to be identified because the
matter was private.
The approach by Pfizer underscores how broad the company’s
search for options has become after failing to strike an almost
$120 billion deal with U.K. drugmaker AstraZeneca Plc last year.
In October, Chief Executive Officer Ian Read said he felt
pressure to do a deal to bulk up the innovative part of the
business. The loss of key patents for blockbuster drugs has left
Pfizer with some revenue holes to fill. “Certainly I feel a
sense of urgency on utilizing our balance sheet and our capital
to do deals that are incremental, add incremental value and
certainly add revenue growth in the innovative space,” Read
said on a conference call with analysts in October. “We are
aggressively looking at all alternatives.”
Press representatives for Teva and Pfizer declined to
comment. Teva is valued at about $50 billion, based on today’s
trading.
While a full-blown takeover of Teva would’ve faced
significant hurdles, Teva’s $9.2 billion-a-year generic drugs
business offers Pfizer a way to beef up its portfolio of off-
patent medicine and give it infrastructure to eventually spin
off into a separate company, three of the people said.
Those products, drugs like Pfizer’s Lipitor that have lost
patent protection but are still well-known brands, require
little additional investment and can generate substantial cash.
Teva makes generic versions of blood pressure drug Diovan, blood
thinner Plavix and antibiotic amoxicillin.
German Partner
The AstraZeneca deal was attractive to Pfizer in part
because of the U.K. company’s oncology pipeline. The proposed
deal would also have let New York-based Pfizer relocate its
legal address overseas, allowing it to lower its U.S. tax bills.
Months after Pfizer dropped its pursuit, the U.S. Treasury
Department imposed rules to limit the tax benefits of so-called
inversion deals. Pfizer’s management hasn’t ruled out doing an
inversion in the wake of those changes.
In November, Pfizer announced a partnership with Germany’s
Merck KGaA, boosting its foothold in oncology by giving it
rights to an experimental drug that’s part of an emerging class
of cancer therapies.
Pfizer is still looking for something to buy after the
failed attempt to acquire AstraZeneca, said people familiar with
the matter. The company has been exploring many ideas, including
talks with Actavis Plc before the company agreed to buy Allergan
Inc., one of the people said.
‘Ample Resources’
For its part, Teva is also looking for deals. The company’s
cash balance provides “ample resources” to look for
acquisitions, Chief Executive Officer Erez Vigodman said in an
investor presentation this month.
Pfizer, the largest U.S. drugmaker, has a legacy of being
an M&A powerhouse. In 2000, New York-based Pfizer paid $116
billion for Warner-Lambert Co.; in 2003 it spent $60 billion for
Pharmacia Corp.; and in 2009 it paid more than $60 billion for
Wyeth LLC -- acquisitions that gave Pfizer blockbuster products
like Lipitor and Prevnar.
Pfizer will probably continue striking deals, in part
because executives have the money to spend, said Damien Conover,
a Chicago-based analyst from Morningstar Inc. The company also
faces pressure to do something because its profit is expanding
relatively slowly, he said.
‘A Lot Left’
“While they do a lot of share repurchases, there’s still a
lot left for them to make acquisitions,” Conover said.
“They’re really motivated to get some growth through some
external collaborations.”
Pfizer should exercise caution in doing deals, said David
Heupel, senior health-care analyst at Thrivent Financial, which
holds Pfizer shares. “I think operationally there are a lot of
positives that are overlooked,” he said. “I’d rather them
execute on that kind of strategy than go out and really stretch
to do a big deal.”
For Related News and Information:
Top Health News: TOP HEA <GO>
--With assistance from Tara Lachapelle and David Welch in New
York.
To contact the reporters on this story:
Cynthia Koons in New York at +1-212-617-5253 or
ckoons@bloomberg.net;
David Wainer in Tel Aviv at +972-3-542-7110 or
dwainer3@bloomberg.net;
Manuel Baigorri in London at +44-20-3525-4457 or
mbaigorri@bloomberg.net
To contact the editors responsible for this story:
Crayton Harrison at +1-212-617-6145 or
tharrison5@bloomberg.net;
Mohammed Hadi at +1-212-617-2914 or
mhadi1@bloomberg.net;
Chitra Somayaji at +44-20-3525-9717 or
csomayaji@bloomberg.net
Drew Armstrong