Ireland and UK are hunting grounds for Pfizer in race to beat US block on tax inversions
Pfizer still has a chance to clinch the drug industry's biggest deal, despite being rejected by AstraZeneca.
Pfizer shelved plans to buy the UK company in May, but its plan B could be an even larger target - €88bn GlaxoSmithKline, according to Berenberg Bank. A takeover of London-based Glaxo, which has slipped in value by about 8pc over the past two weeks, would give Pfizer a lung drug business and more vaccines. Another possibility, Irish-domiciled Actavis at €43bn, would offer a pipeline of new products and generic medicines. Either one could allow the New York-based company to move its headquarters abroad and lower its tax rate.
In hunting for a deal, Pfizer is looking to reduce taxes and restock a dwindling stable of patent-protected drugs. Without an acquisition, Pfizer will have almost no revenue growth over the next decade, according to analysts' estimates compiled by Bloomberg. Rather than falling back on share repurchases to boost earnings, Pfizer should have done a deal by now, reported SunTrust Banks.
"If they're willing to go after AstraZeneca, they can obviously go after other sizable targets," said Kevin Kedra, an analyst at Gabelli & Co.
"There's not much to limit Pfizer, except finding a deal that makes sense."
The combination of cost savings, low borrowing rates and reduced taxes make the case for an acquisition, Mr Kedra said.
A US threat to thwart so-called tax inversion means "there's a lot of motivation to have a deal happen now," he said. (Bloomberg)