Stock Evaluation: Pfizer to Purchase King Pharmaceuticals
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Stock Evaluation: Pfizer to Purchase King Pharmaceuticals

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Given in a lecture for Corporate Finance class at the HTW, Berlin.

Given in a lecture for Corporate Finance class at the HTW, Berlin.

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  • Deal to close midnight Jan. 21
  • Fund.: Wyeth purchased in early 2009 / Pfizer pleaded guilty in 2009 to the largest health care fraud in U.S. history and received the largest criminal penalty ever levied for illegal marketing of four of its drugs. Called a repeat offender, this was Pfizer's fourth such settlement with the U.S. Department of Justice in the previous ten years.[5][6] On January 26, 2009, Pfizer agreed to buy pharmaceutical giant Wyeth for US$68 billion, a deal financed with cash, shares and loans.[7] The deal was completed on October 15, 2009.

Transcript

  • 1. Pfizer to Purchase King Pharmaceuticals News from October 14, 2010 – Pharmtech Newsletter Magda Neumann – Alina Sachapow – Kasey Navita Phifer [ January 4, 2011 ] www.kNavita.com
  • 2. News Details• Pfizer produces pharmaceuticals (Viagra, Lipitor, Celebrex)• Announcement of Purchase: Oct. 12, 2010• $3.6 billion cash• Pfizer paid $14.25 per share (40% higher than closing price)• Top two Pfizer drug patents (Lipitor & Xalatan) expire 2011• Purchased Wyeth in early 2009 Magda Neumann – Alina Sachapow – Navi K. Phifer [ January 4, 2011 ]
  • 3. Financials of the NewsPFE 2008 2009 2010 (3rd Q)Total Revenue 48.296 50.009 66.78Net Income 8.104 8.635 7.85Total Assets 111.148 212.949 191.415Total Liabilities 53.592 122.935 103.780Total Debt 17.283 48.662 43.28Cash And Cash 2.122 1.978 2.176EquivalentsShare Price* 12.31 17.55 16.06 Numbers in billions of USD *Share Price NOT in billions Magda Neumann – Alina Sachapow – Navi K. Phifer [ January 4, 2011 ]
  • 4. Magda Neumann – Alina Sachapow – Navi K. Phifer [ January 4, 2011 ]
  • 5. Theoretical Linkages• Chapter 7• Technical analysis - Trends, volume, OBV, MACD, SMA• Fundamental analysis - Background information• Valuation by comparables Magda Neumann – Alina Sachapow – Navi K. Phifer [ January 4, 2011 ]
  • 6. Conclusion• Purchase of King less dramatic than Wyeth• Tactical desicion regarding expiring patents, falling stock prices & growing competition• Stock price still low (compared to $50 earlier) Magda Neumann – Alina Sachapow – Navi K. Phifer [ January 4, 2011 ]
  • 7. Resources• Brealey/Myers/Marcus, Fundamentals of Corporate Finance, 6th Edition, McGraw- Hill, 2009 [Chapter 7]• http://www.wikinvest.com/stock/Pfizer_(PFE)/Generic%20Competition (accessed 21.11.2010)• http://de.finance.yahoo.com/echarts?s=PFE#symbol=pfe;range=2y;compare=;indic ator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefi ned; (accessed 15.11.2010)• http://www.wikinvest.com/stock/Pfizer_(PFE)/Generic%20Competition (accessed 21.11.2010)• http://drugdelivery.pharmaceutical-business- review.com/news/pfizers_q4_revenue_decreases_290109 (accessed 21.11.2010)• http://www.wikinvest.com/stock/Pfizer_(PFE)/Data/Key_Metrics (accessed 21.11.2010)• http://de.finance.yahoo.com/echarts?s=PFE#chart8 (accessed 15.11.2010)• http://www.marketwatch.com/investing/stock/PFE/charts?countryCode=US&subm itted=true&intflavor=advanced&origurl=%2Ftools%2Fquotes%2Fintchart.asp&time =9&freq=1&comp=Enter%20Symbol(s)%3A&compidx=aaaaa~0&compind=aaaaa~0 &uf=7168&ma=1&maval=50&lf=1&lf2=4&lf3=8&type=2&size=2&optstyle=1013 (accessed 15.11.2010)• http://www.investopedia.com/university/technical/ (accessed 14.11.2010)
  • 8. Thank You for Your Attention!Magda Neumann – Alina Sachapow – Navi K. Phifer [ January 4, 2011 ] www.kNavita.com