Market Overview

Pfizer, Allergan Shares Pop After Buyout Rumor

Pfizer, Allergan Shares Pop After Buyout Rumor
Related AGN
Benzinga's Top Upgrades, Downgrades For September 20, 2017
The Market In 5 Minutes
Related PFE
Pfizer Should Outperform, Morgan Stanley Upgrades
A Peek Into The Markets: U.S. Stock Futures Flat; All Eyes On Fed Decision
Stock Futures Flat Before Fed; Will Netflix Top Subscriber Targets? (Investor's Business Daily)

Two of the world's biggest pharmaceutical giants -- Allergan PLC (NYSE: AGN) and Pfizer Inc. (NYSE: PFE) -- are trending after a rumor hit newswires that the two could combine after Allergan sells its Generics division.

The rumor, attributed to information shared on a Mizuho roadshow, initially broke near 11:00 a.m. ET. Pfizer shares rose above the $33.60 level, while Allergan followed a similar trading pattern.

According to Benzinga Pro, the hypothetical deal may be easier for Pfizer to finance once Allergan sells its $40.5 billion generic drug business to Teva Pharmaceutical Industries Ltd (ADR) (NYSE: TEVA). The current market capitalization of Allergan is just over $107 billion.

In an interview with Benzinga, a Pfizer spokesperson declined to comment on speculation regarding potential talks with Allergan.

M&A Market Booming

Last month, a report from JMP Securities revealed August was a record month for M&A announcements. Total activity for the month rose past $350 billion, 20 percent above August 2014. Analyst Devin Ryan said equity market declines "increases the probability" of an M&A "market disruption" – but one month alone "generally has little impact."

According to Ryan, it's too early to tell when the M&A boom will end. "[W]e think the current upcycle remains intact as of now, but are watching equity markets particularly closely, as we believe performance in September is critical to whether the direction of M&A continues to move forward or begins to roll over," he wrote at the time.

Ryan added that there's three things indicating a M&A market top:

1. "Steep" declines in equity markets.
2. A recession.
3. "Significant" deterioration in the credit markets.

Point No. 1? Check. The S&P 500 is down 2 percent on the year after a drastic selloff in late August.

Point No. 2? It's too early to tell, though worth noting Societe Generale’s Albert Edwards recently wrote a U.S. recession could be sooner than many think.

Point No. 3? Look no further than Carl Icahn's mega-thesis on various bubbles in the credit market.

Posted-In: mizuho Mizuho roadshowBiotech News Rumors Movers General Best of Benzinga


Related Articles (AGN + PFE)

View Comments and Join the Discussion!