April 5, 2016

Is The Allergan-Pfizer Deal Over? What Wall Street Thinks

Yesterday's stunning announcement by the US Treasury, which released a report titled  "Treasury Announces Additional Action to Curb Inversions, Address Earnings Stripping", and which was clearly aimed at ending not only all tax inversions, but the biggest pharma M&A deal in history, Pfizer's tax-inverting takeover of Allergan (pardon Actavis) hit AGN like a ton of bricks, sending the stock crashing 20%. 

As we previewed last night, we expect numerous M&A arbs to be puking up blood this morning, following the biggest spread blow out in recent history in a $100+ billion deal that involved virtually everyone, from plain vanilla funds to the fastest of the fast money.

But is the deal over? Here are some Wall Street opinions (via BBG).

Citi: "Deal likely to be over"

U.S. ownership of combined Pfizer-Allergan will probably approach and may exceed 80% threshold under new Treasury Dept. regulation, "likely precluding" deal from taking place as an inversion, Citi analyst Liav Abraham says in note.

Even if domestic ownership is in 60%-80% range, Citi says PFE would probably have difficulty importing its offshore cash balances, providing sufficient cause for the deal not to move forward

Expects AGN will see multiple contraction over near term as deal had insulated stock from recent multiple contraction in specialty pharma; says AGN warrants premium to peer group due to earnings quality, growth profile and balance sheet,

Read the entire article

No comments:

Post a Comment