Consumer goods makers were in demand on Wednesday after a bid approach for SABMiller refreshed talk about other possible targets.
Reckitt Benckiser was among the beneficiaries on speculation that it might become a target for Pfizer.
Having last year had its takeover of AstraZeneca blocked, Pfizer has reportedly been investigating breaking up its business.
Splitting into two then buying Reckitt would release Pfizer’s $40bn of cash trapped overseas and would face lower regulatory hurdles than the AstraZeneca bid, said Exane BNP Paribas.
“Our reading of the situation is that a split is nigh on inevitable and that at least one part of Pfizer will again have a burning incentive to seek a tax inversion trade,” Exane told clients.
It expected Pfizer to spin off its legacy pharmaceuticals division in 2017 then seek a tax inversion either with a European drugmaker or a consumer healthcare company.
Reckitt would be big enough to make the maths work even under tightened inversion rules, as would Shire — providing it succeeds with a hostile offer for Baxalta, said the broker.
And if Pfizer takes the path of buying a drugmaker then it will probably sell its consumer healthcare business, most likely to Reckitt, Exane added.
The broker put a £66 target on Reckitt shares, which rose 2.9 per cent to £58.55.