Pfizer Buys the King

Here’s your basic equation for Merger Mania: lots of cash plus low stock prices equals mega-deals. It doesn’t get much more complicated than that. These deals continue to be a theme in the healthcare sector. The latest is that Pfizer (PFE) will buy King Pharmaceuticals (KG) for $3.6 billion.

Pfizer is offering $14.25 for King which is a 40% premium to yesterday’s closing price. This is a big move for Pfizer. With the deal, Pfizer picks up muscle relaxant Skelaxin. Pfizer had to make some deals soon because next year its blockbuster Lipitor will face competition from generics. Pfizer said the deal will add about two cents per share to its profit in 2011 and 2012, and three to four cents per share in each of the next three years.

I don’t have much to say about today’s market. Here are some quick unconnected thoughts:

Intel (INTC) reports after the bell. Wall Street’s consensus is for 50 cents per share. I expect 50 or 51 cents, maybe 52 cents. The other big news today will come at 2 pm when the Federal Reserve releases the minutes of its last meeting.

This stat caught my eye: Bloomberg reports that first-half operating expenses at the six biggest U.S. financial firms—Bank of America, JPMorgan, Citi, Wells Fargo, Goldman and Morgan Stanley— grew by $7.92 billion, or 5.9%. Revenue fell by $5.6 billion, or 2.2%.

Finally, on Friday Kulicke and Soffa (KLIC) plunged 10%. No need to worry. Jefferies has just downgraded them to a Hold. Thanks, guys.

Posted by on October 12th, 2010 at 9:39 am


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