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Monday, 03/27/2017 10:41:14 AM

Monday, March 27, 2017 10:41:14 AM

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Rumors persist:

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March 27, 2017, 9:45 A.M. ET
Bristol-Myers: Maybe a Pfizer Acquisition Could Makes Sense After All?

By Ben Levisohn

Remember when Bristol-Myers Squibb (BMY) was getting hit so hard that everyone was wondering whether it would find itself acquired by another pharmaceutical, with Pfizer (PFE), Novartis (NVS), Gilead Sciences (GILD), and Roche mentioned as possible buyers? Well, that speculation just won’t die.

In a note released yesterday, Credit Suisse analyst Vamil Divan and team revisit the possibility of Pfizer taking over Bristol-Myers with their colleagues at the firm’s HOLT team…and find that it just might provide “an opportunity for value creation” after all. They explain why:

Overall, HOLT® suggests that an acquisition of BMY by PFE would have a positive impact on PFE’s return on capital profile when assuming industry average synergies for a deal of this nature. An all-cash deal (assuming PFE pays a 25% premium and can extract synergies of 30% of BMY’s operating expenses) would lead to about $5Bn or approximately $.80 per share in value creation, according to HOLT. If instead of an all-cash deal, PFE issues shares to pay for a portion, dilution from issuing “undervalued” shares will offset the initial value creation. A deal partially financed with an 18% stock issuance would be a break-even for PFE shareholders.

Shares of Bristol-Myers Squibb have fallen 0.68% to $55.89, while Pfizer has fallen 0.74% to $34. Novartis has gained 0.73% to $74.37, and Gilead Sciences has declined 0.76% to $67.51.
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http://blogs.barrons.com/stockstowatchtoday/2017/03/27/bristol-myers-maybe-a-pfizer-acquisition-could-makes-sense-after-all/

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