A Bayer Buyout by Pfizer?

Shares of German drug maker and chemical concern Bayer (BAYRY.PK) were boosted by about 3% in early trading today on word that Pfizer (PFE) may be interested in acquiring the company for its prescription drug business and pipeline. Shares of Bayer are currently valued at a market cap of about $59 billion US Dollars, which is less than half of the $129 billion market value of Pfizer. Such a deal would likely involve a break-up of Bayer, since the Company derives 31% of its sales from pharmaceuticals, 13% from consumer healthcare, 22% from agricultural sciences, and 30% from chemicals.

Since Pfizer sold its consumer healthcare division to Johnson & Johnson (JNJ), it would be most interested in Bayer's prescription drug business and pipeline ahead of expected generic competition for the world's best selling drug Lipitor in late 2011. Since I first wrote about Pfizer in mid-July, the shares have risen by about 10%, but are still trading close to multi-year lows with a dividend yield near 7%.

Comments

[Ax:]

Pfizer denied that it was looking for a large acquisition. And I think they mean it. They want to buy rights and licenses for marketing drugs, since they are present in global markets with great distribution capabilities. That's their strategy. They will not shift away from that. They don't consider themselves as desperate so I really don't think they'll make a large acquisition.

They have only 3 year to limit the loss of Lipitor and their focus is on cutting costs and find great compounds and drugs. A big acquisition would be a relief for shareholders in the short run... but it would also mean that the company would lose focus. It is difficult to merge different business cultures in such a short period of time.

But if they do it, they should buy Biogen Idec.

2008 Sep 09 06:58 AM

[turd furgeson:]

Buy biogen idec and Pfizer will lose every biogen idec employee (no biogen idec employee will work for a mammoth like pfizer), Rituxan (to Genentech), and possibly Tysabri (to Elan) as well. Your left with Avonex, with it's few short years left and an full pipeline that may or may not come to fruition. All that for at a price of at least 20 Billion? I think PFE will pass.

2008 Sep 09 08:44 AM