According to a report by Reuters over the weekend, citing a person with knowledge of the matter, Pfizer Inc (PFE) is exploring a merger of its off-patent drugs business with Mylan NV in a stock deal.
Pfizer shares closed lower for the fifth time in the past eleven trading sessions in New York on Monday. It has also been the steepest daily loss since October 11th 2018. The stock went down 3.81% ($1.64) to $41.45, after touching an intraday low at $41.34, or a price level not seen since May 29th ($41.28).
Shares of Pfizer Inc have retreated 5.04% so far in 2019 compared with a 20.51% gain for the benchmark index, S&P 500 (SPX).
In 2018, Pfizer Inc’s stock went up 20.51%, thus, it outperformed the S&P 500, which registered a 6.24% loss.
The source noted that shareholders of Mylan NV would own a bit over 40% of the newly formed company, while the rest would be owned by Pfizer shareholders.
Additionally, Pfizer is to generate proceeds of about $12 billion from a new sale of debt, the person said.
According to the source, separation of Pfizer Inc’s off-patent business is to be treated as a tax-free spin-off.
In July last year, Pfizer announced it would be reorganized into three units – Innovative Medicines, Established Medicines and Consumer Healthcare.
Analyst stock price forecast and recommendation
According to CNN Money, the 9 analysts, offering 12-month forecasts regarding Pfizer Inc’s stock price, have a median target of $48.00, with a high estimate of $53.00 and a low estimate of $41.00. The median estimate represents a 15.80% upside compared to the closing price of $41.45 on July 29th.
The same media also reported that at least 7 out of 13 surveyed investment analysts had rated Pfizer Inc’s stock as “Buy”, while 4 – as “Hold”.
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