Biotech Values

[DewDiligence]

Bayer Shares Rise on Pfizer Buyout Talk

http://www.reuters.com/article/marketsNews/idINL935823720080909

›Tue Sep 9, 2008 5:19am EDT

FRANKFURT, Sept 9 (Reuters) - Shares in German drugs and chemicals group Bayer (BAYG.DE) rose on market talk of takeover interest from U.S. rival Pfizer (PFE), traders said on Tuesday.

Bayer shares were 3.3 percent higher at 54.44 euros by 0905 GMT, compared with a 0.9 percent rise on the German benchmark DAX .GDAXI index.

Bayer, which has a market capitalisation of around 40 billion euros ($57 billion), declined to comment. Pfizer was not immediately available for comment.

Bayer, which boasts a healthy pipeline of new drugs and an attractive over-the-counter medicines business, has been a rumoured takeover target in the past.

Any acquisition by a pure pharmaceutical company, however, would be complicated, since it would require the break-up of the chemical-drugs hybrid. Bayer is also a top global player in plastics and in agrochemicals.

For Pfizer, buying Bayer would also bring an added complication in that the U.S. group only recently sold off its non-prescription drug business to Johnson & Johnson (JNJ). [I don’t understand the point here—what does one deal have to do with the other?]

Pfizer has a history of doing mega-deals but investors have been disappointed by past acquisitions that have failed to curtail its reliance on ageing blockbusters, including cholesterol fighter Lipitor, which goes off patent in 2011. The company rakes in $13 billion a year for Lipitor and needs new products to offset sales declines of this and other products.‹