Drug Giant's Stock Jumps on Takeover Speculation
Dec. 22, 1987
NEW YORK (AP) _ Pfizer Inc.'s stock rose sharply Tuesday because of takeover rumors about the company, a major international producer and marketer of pharmaceutical s and hospital products.
Drug industry analysts generally were skeptical about the rumors because a Pfizer takeover would be prohibitively expensive and the company has indicated it wants to remain independent.
Pfizer, whose consumer products range from Coty cosmetics to Ben-Gay pain relief salve, issued a brief statement that it knew of no reason for the unsual trading activity. Company officials would not comment further.
In an otherwise dismal stock market, Pfizer stock jumped $3.25 a share to $49.75 in heavy New York Stock Exchange composite trading. The stock had risen $1.25 to $46.50 on Monday.
Pfizer has more than 160 million shares outstanding, giving it a market valuation of $7.9 billion.
Some analysts said the takeover rumors apparently stemmed from expectations that the company will have nearly $2 billion in cash on hand by the end of the year, which might make it an attractive target.
Moreover, Pfizer's stock has remained depressed since the Oct. 19 crash and some shareholders are said to be unhappy that management has not undertaken a stock repurchase program to boost the value of the shares that would remain on the market.
Nevertheless, many analysts discounted the takeover rumors because of Pfizer's enormous size and leading position in drug research and development. They said a hostile takeover likely would be financed by heavy debt that could result in destroying Pfizer's competitiveness and therefore its value.
''I don't think it's goinng to happen,'' said David Lippmann, drug industry analyst at Drexel Burnham Lambert Inc. in New York. ''First of all they'll fight it. Secondly, I don't think it's conceptually interesting because it would be self-defeating.''
Based in New York, Pfizer is No. 84 on Fortune magazine's list of the 500 biggest industrial companies. It 1986 sales of $4.47 billion, nearly half of it abroad. The company has 40,000 employees.