Earlier in the week we told you that Pfizerinked a deal to buy rival Wyeth for $68 billion, but since then, Pfizer shares have fallen to nearly a 12-year low and some shareholders are questioning the wisdom of the planned union.
"(Investors) seem underwhelmed by the deal, maybe thinking Pfizer made a safe move with Wyethrather than trying to shoot the lights out with a more aggressive company better able to produce blockbuster drugs," says Peter Jankovskis, co-chief investment officer of OakBrook Investments.
However, Pfizer's falling share price might have more to do with Pfizer’s dividend, than anything else, explains CNBC’s Mike Huckman. The deal will force the drugmaker to halve its dividend and as a result some investors might want to bail – or even have to bail, for that matter.
He also says the deal dilutes the stock and then there's the issue of debt. Pfizer is taking on $22 billion to get the deal done, he adds.
Meanwhile the union should help Pfizer hold its position after its patent on Lipitor wears out in 2011. By acquiring Wyeth, they get Wyeth’s Prevnar childhood vaccine and Enbrel arthritis drug –both big blockbusters which generate large revenue streams.
I think the deal is a disaster, exclaims Guy Adami. There are probably 10 other companies they could have bought cheaper.