Acquisitions by Pfizer

B. Rajesh Kumar
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B. Rajesh Kumar: Institute of Management Technology

Chapter 8 in Wealth Creation in the World’s Largest Mergers and Acquisitions, 2019, pp 85-99 from Springer

Abstract: Abstract Pfizer has grown by megamergers and acquisitions. In the year 2000, Pfizer acquired Warner–Lambert. This $90-billion merger deal resulted in the creation of the second largest pharmaceutical company in the world. The deal ended the 3-month hostile battle to acquire Warner–Lambert. On merger completion, Pfizer shareholders owned approximately 61% of the new company, while Warner–Lambert shareholders owned 39% of the company. Pfizer’s acquisition of Warner–Lambert resulted in the combined group having eight products with greater than $1 billion in global sales and R&D budget which amounted to $4.7 billion. The combination gave leadership position to Pfizer in the areas of cardiovascular, lipid control drugs, central nervous system, and infectious disease pharmaceutical segments. The cumulative returns for Pfizer during the 240-day period surrounding the Warner–Lambert acquisition announcement were 29%. In 2003, Pfizer the largest drug maker bought Pharmacia for $60 billion. The merger created a drug company with $46 billion in annual sales and added portfolio of leading drugs for impotence, high cholesterol, arthritis, glaucoma, and depression. The merger consolidated position as the number one drug maker in terms of annual sales. Pfizer shareholders owned 77% of the combined company, and Pharmacia’s shareholders owned 23% of the combined company. The cumulative gains registered by the Pfizer stock on account of Pharmacia merger during the 245-day period (July 1, 2002–July 5, 2003) was 7%. During 2009, Pfizer acquired Wyeth in a cash-and-stock transaction valued at $68 billion. The combination created one of the most diversified companies in the global healthcare industry. The combination of Pfizer and Wyeth created the world’s premier biopharmaceutical company with diversification and scale position. Pfizer and Wyeth have highly complementary businesses. The cumulative returns for Pfizer accounted by Wyeth acquisition during the 251-day acquisition period (−5 to +245-day) was 16%. The average increase in operating income for Pfizer during the Wyeth post-merger 6-year period (2011–2016) was 6.5%.

Keywords: Pfizer; Trust Company; Global Healthcare Industry; Cumulative Return; Acquisition Announcement (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1007/978-3-030-02363-8_8

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