After the significant acquisitions of Wyeth and King Pharmaceuticals, Pfizer Inc. (PFE) has set its aim at Icagen Inc. (ICGN) as the pharma-major inked an agreement to acquire the latter. Pfizer already owns around 11% of Icagen’s shares and will pay $6.00 per share for the remaining 89% or 8.3 million shares.
The total transaction value for all of Icagen’s shares (including the already owned 11%) amounted to roughly $56 million for Pfizer. The merger is expected to be completed by the end of this year.
Earlier in August 2007, Pfizer and Icagen had entered into collaboration for the discovery, development and commercialization of compounds that modify three specific sodium ion channels that are to be used as potential treatments for pain and related disorders. With the help of these sodium channels, the companies are seeking to develop effective treatments for serious pain disorders, which will have fewer side effects.
Our Take
We currently have a Zacks #2 Rank (short-term Buy rating) on Pfizer. We note that the acquisition of Icagen will add to the company’s already diversified product portfolio.
In February of this year, Pfizer completed the acquisition of King Pharmaceuticals for $3.6 billion. This acquisition helped Pfizer strengthen its position in the pain-management market, which represents significant commercial opportunity.
Additionally, in October 2009, Pfizer acquired Wyeth, for $68 billion. With this acquisition, Pfizer became a more diversified health care company with a stronger presence in emerging markets.
We remain concerned about the company as several of its products are slated to lose patent protection over the next few years. However, we believe these acquisitions will strengthen Pfizer’s product portfolio and help offset the negative impact these patent expiries will have on the company’s revenues.
Longer-term, we have a Neutral recommendation on Pfizer.
