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Essay / Research Paper Abstract
This 5 page paper discusses this transaction. The purchase price and deal are reported as are the immediate effects, such as laying off thousands. The benefits of the merger are discussed, including the risk both companies faced with expiring patents. The synergies of the companies are also discussed. The writer offers recommendations and a personal opinion about whether or not the merger is worth it to the companies. Bibliography lists 7 sources.
Page Count:
5 pages (~225 words per page)
File: ME12_PGpfzwy9.rtf
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Unformatted sample text from the term paper:
was worth $17.95 at the time (St. Louis Business Journal, 2009). Pfizer financed the deal with stock shares, cash and additional debt (St. Louis Business Journal, 2009). A number of
banks guaranteed an aggregate total of $22.5 billion in loans to Pfizer (St. Louis Business Journal, 2009). In other words, Pfizer paid one-third of the cost from their own cash
reserves, one-third in equity, and one-third with additional debt. Their debt increased from $17.3 billion to $39.5 billion after the deal. Leverage increased "to 1.8 times from 0.8x for the
latest 12-month (LTM) period at the end of the second quarter of 2009 versus 2008, respectively" (Business Wire, 2009). Pro Forma leverage for the same period was 1.7x, including financial
results from Wyeth (Business Wire, 2009). Leverage is expected to decrease to 1.3x in 2011 (Business Wire, 2009). Pfizer gains immediate cash flow. The company gained "$20 billion from Wyeths
diverse portfolio of products" (Armstrong, 2009, p. 36). The merger gives Pfizer more time to come up with a blockbuster drug but it also gave Pfizer Wyeths Enbrel and Prevnar,
two biologics (Armstrong, 2009). It also increases Pfizers top line from $40 billion to $60 billion for prescription drugs plus another $10 billion for consumer products (Armstrong, 2009). Between these
and the layoffs, Pfizer will gain economies of scale through savings (Armstrong, 2009). Estimated profit for the next four ears is 0.9 percent instead of the five-plus percent it was
losing (Armstrong, 2009). The two companies talked of synergies but one must be very careful when interpreting this word were a merger is concerned. It is sometimes shorthand for layoffs
due to duplicate staff. In fact, Pfizer announced it would lay off 8,000 employees between the signing of the deal and 2011 (Chemical Business Newsbase, 2009). That is in addition
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