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Wyeth deal fails to create spark: Two days after Pfizer (PFE) agreed to buy Wyeth (WYE) for...

Wyeth deal fails to create spark: Two days after Pfizer (PFE) agreed to buy Wyeth (WYE) for $68B, PFE shares have fallen to nearly a 12-year low, and some shareholders are questioning the wisdom of the planned union.
Comments (1)
  • Jake Huneycutt
    , contributor
    Comments (1382) | Send Message
     
    Large company acquisitions of other large companies typically do not create shareholder value. They also make little sense from a shareholder perspective - it's not as if you couldn't buy shares of Wyeth yourself if you wanted to. Why do you want a company to force that transaction on you without any visible reason as to why the acquisition was vital, necessary, or cost effective?

     

    This deal in particular seems to serve very little function. Why does Wyeth create value for Pfizer? How can two goliaths be integrated? Does such "integration" really create any benefits?

     

    As an investor, I look for lean, focused companies. I prefer to keep away from large caps, but the ones I do like tend to have a fairly coherent vision (e.g. ABB). I don't see that a Pfizer and Wyeth combination achieves that. If Pfizer wanted to make an acqusition, it would seem to have made more sense to have looked into micro-cap and small-cap biotechs with intriguing prospects.
    29 Jan 2009, 11:46 AM Reply Like
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