The Motley Fool

Will Pfizer Inc. Make A Bid For GlaxoSmithKline plc?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

GlaxoSmithKline’s (LSE: GSK) (NYSE: GSK.US) shares have slumped nearly 12%, year to date, a disappointing performance for investors. However, these declines now mean that Glaxo’s total market value is around $116bn, $4bn below the $120bn offer that US pharmaceutical giant Pfizer recently made for Glaxo’s peer, AstraZeneca (LSE: AZN) (NYSE: AZN.US).

With this being the case, it’s entirely possible that Pfizer could come back and make a bid for Glaxo, as the U.S. behemoth searches for bolt-on acquisitions to boost growth. 

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

A great fitgsk

Glaxo and Pfizer would fit together well. The two companies are already cooperating together on some projects, including an HIV joint venture and Glaxo has a strong presence within the vaccines market — something Pfizer is likely to find attractive.

What’s more, Pfizer is bound to be attracted by Glaxo’s low corporate tax rate of only 20%.

However, if Pfizer did to go ahead and launch a bid, Glaxo’s deal with Novartis would fall apart. Indeed, it is unlikely that Pfizer would be attracted to Glaxo’s world-leading consumer healthcare business.

Further, Pfizer would want to gain access to Glaxo’s oncology portfolio, which is being sold to Novartis as part of the deal. 

Then there is the price to consider. It’s likely that Pfizer will have to offer a significant premium to Glaxo’s current share price, in order for the offer to be accepted by investors.

Specifically, City analysts believe that Pfizer would have to offer a premium of 40%, or just under 2,000p per share. A cost to Pfizer of around $170bn, some analysts believe that this figure is too large even for the world’s largest pharmaceutical company.  

Second attempt 

Meanwhile, it has also been rumoured that Pfizer will make another attempt to buy Astra during the next few months. 

These rumours stem from the fact that Pfizer has recently been facing significant pressure from investors, after unveiling a poor set of half-year results. The company is now under pressure to re-enter negotiations in order to boost its treatment pipeline and flagging profits. 

Pfizer has to wait until November before it can make another unsolicited approach for Astra, although if Astra’s shareholders for the company back to the table, an offer could be made sooner.

And it appears as if Pfizer is running out of time to cut a deal with a UK based company. According to people with knowledge of the matter, the process of tax inversion, where a company shifts its global tax base by buying a smaller rival, may be outlawed within the next 18 months, which would make any deal between Pfizer, Astra or Glaxo less attractive.  

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Rupert Hargreaves owns shares of GlaxoSmithKline. The Motley Fool recommends GlaxoSmithKline.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.