The thesis analyses the merger of Pfizer Inc. and Allergan in 2015. The goal of the thesis is to value Allergan using multiples at the time of a takeover announcement and to examine whether the offer price is fair. The thesis further examines the price reactions of Allergan, Pfizer, and optionally their competitors on the announcement date using event study analysis.
On November 23, 2015, Pfizer Inc. and Allergan, Plc publicly announced their intention to merge to form the world’s largest drug maker. The boards of both companies had ratified the deal worth approximately $160 billion the day before. This sum would make it not only the largest pharmaceutical deal ever, but also the third largest corporate merger in history.
The takeover would also be the largest so-called “inversion” deal to date. These deals consist of a US company buying a foreign rival to adopt their lower tax jurisdictions. To achieve this goal, Dublin-based Allergan would buy the larger New-York based Pfizer in a reverse merger. Just days before the announcement of the merger, the Treasury Department released new rules aiming to curb tax-lowering inversion deals. On April 6, 2016, Pfizer and Allergan announced they would be calling off the merger.
Inhaltsverzeichnis (Table of Contents)
- 1. Introduction
- 2. Multiples Valuation
- 2.1 The pharmaceutical industry
- 2.2 Comparable Companies
- 2.3 Multiples Selection and Results
- 3. Transaction Multiples Valuation
- 3.1 Comparable Transactions
- 3.2 Multiples Selection and Results
- 4. Event Study Analysis - Merger
- 4.1 Parameter Selection
- 4.2 Results
- 5. Event Study Analysis - Termination
- 5.1 Parameter Selection
- 5.2 Results
- 6. Conclusion
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This bachelor thesis analyzes the failed acquisition of Allergan by Pfizer using valuation methods, focusing on multiples valuation and event study analysis. It aims to provide a comprehensive analysis of the transaction's value and its impact on both companies' stock prices.
- Multiples Valuation: Analyzing the pharmaceutical industry, comparable companies, and transaction multiples.
- Event Study Analysis: Examining the impact of the merger and termination announcements on stock prices.
- Valuation Methods: Comparing and contrasting different valuation techniques.
- Pharmaceutical Industry Dynamics: Exploring factors influencing the pharmaceutical industry's landscape.
- M&A in Pharmaceuticals: Analyzing the strategic considerations behind mergers and acquisitions in the pharmaceutical sector.
Zusammenfassung der Kapitel (Chapter Summaries)
- Chapter 1: Introduction: Provides an overview of the failed acquisition of Allergan by Pfizer and the importance of valuation methods in analyzing such transactions.
- Chapter 2: Multiples Valuation: Analyzes the pharmaceutical industry, identifying comparable companies and their multiples, leading to a valuation of Allergan.
- Chapter 3: Transaction Multiples Valuation: Examines comparable transactions in the pharmaceutical sector, applying multiples valuation to determine the transaction value of the Allergan acquisition.
- Chapter 4: Event Study Analysis - Merger: Examines the impact of the merger announcement on both Pfizer and Allergan's stock prices, analyzing the abnormal returns.
- Chapter 5: Event Study Analysis - Termination: Analyzes the effect of the termination announcement on the stock prices of both companies, assessing the abnormal returns.
Schlüsselwörter (Keywords)
This study focuses on the pharmaceutical industry, multiples valuation, event study analysis, mergers and acquisitions (M&A), transaction value, abnormal returns, stock price impact, and the failed acquisition of Allergan by Pfizer.
- Citation du texte
- Oliver Terhechte (Auteur), 2017, The (failed) Acquisition of Allergan by Pfizer. Multiples Valuation and Event Study Analysis, Munich, GRIN Verlag, https://www.grin.com/document/919414
