Market Overview

Pfizer, Allergan Shares Pop After Buyout Rumor

Pfizer, Allergan Shares Pop After Buyout Rumor
Related AGN
Carl Icahn's Track Record In Big Pharma
After Merck Stops Study, What Remains Of The Alzheimer's Drug Pipeline?
North Tide Capital, Llc Buys Impax Laboratories, Allergan PLC, Accuray, Sells Community Health ... (GuruFocus)
Related PFE
Carl Icahn's Track Record In Big Pharma
Icahn Takes Bristol-Myers Stake With M&A In Mind; Who Could Be The Acquirer?
Pfizer Reports Top-Line Results for Rheumatoid Arthritis Treatment Study (GuruFocus)

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!