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Is Pfizer now eyeing up Actavis three months after failed AZ bid?

By Dan Stanton+

28-Aug-2014
Last updated on 28-Aug-2014 at 09:58 GMT

Pfizer is rumoured to be eyeing up Actavis three months after failing to woo AstraZeneca in a $120bn megamerger, but what would such a deal bring to the Pharma Giant? In-Pharmatechnologist investigates.

Pfizer’s interest in AstraZeneca was the big ‘will-they, won’t-they’ story of the Spring, even pushing attention away from such other wooing attempts as Valeant and Allergan before finally ‘fizzling’ out for the Summer break.

Under UK merger and competition laws, Pfizer must wait six months before resubmitting a formal offer but AstraZeneca could initiate a new round of bidding after three. However, the three month wait passed this week and with no sign of the UK-based pharma giant inviting Pfizer round the board table, some media and investor types have been speculating Pfizer may be looking elsewhere, with Actavis being a potential target.

ISI Group analyst Mark Schoenebaum recently carried out a survey as to what his investors thought of Pfizer’s M&A policy. “In my opinion, an Actavis acquisition by Pfizer might make some sense (would probably allow for an inversion; would strengthen established products business), but the market would likely prefer that Pfizer purchase AstraZeneca,” he said in a note.

However, the respondents also favour an Actavis bid, with just over 50% believing Pfizer should make an offer, compared to 44% believing another offer for AstraZeneca should be made.

However, only 30% of respondents seemed to think an Actavis bid would be made by the end of the year, compared to 55% for AstraZeneca. But if Pfizer cannot change its tax residency through a mega-merger, half the people polled believed Pfizer should not buy any company.

Schoenebaum also asked investors what advice they would like to give Pfizer’s CEO Ian Read and other top management. A few of the more printable comments are listed below:

Sharpen your pencils for the next round of bidding. Pfizer gets what Pfizer wants. The world is watching.”

“Buy Actavis. AZ is a pipedream. Actavis has hard assets.”

“Take a cold shower and walk away from AZ. Tax evasion, sorry inversion, is not an acceptable reason to do M&A.”

“Replenish the pipeline with cancer and liver based drugs.”

 “Pfizer should challenge The White House to a cage match –Read vs Obama & [Frank] D'Ameilio [CFO] vs the entire Cabinet at once.  Prediction: Ian takes down Obama in less than 60 seconds. Frank takes two seconds - 1 second to put his fists up and 1 second for the Cabinet to tap out.”

Actavis Assets

According to Bloomberg , Actavis has a market value of around $59bn, a price which would allow Pfizer to change its tax residency to Ireland. However, other than tax benefits, in-Pharmatechnologist.com has put together an infographic as to what Actavis would give Pfizer.

All data comes from Actavis’s annual report and is as of Decmber 31 2013, except for Forest Labs – which was acquired by Actavis for $28bn in July – which is correct up until March 31, and is based on its report for year ending March 2013 .

And as for manufacturing facilities, below are the locations of Actavis' API (blue), finished formulation (red), leased properties (yellow) sites, as well as the four plants run by Forest:

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