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An analysis of Pfizer’s takeover announcement of Pharmacia; a clinical examination of abnormal returns.
Stockholm University, Faculty of Social Sciences, School of Business.
2004 (English)Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

This is a clinical short-term study based upon Pfizer’s takeover announcement for Pharmacia on the 15th July 2002. The purpose of this study is to explicitly show, for both companies the impact on abnormal returns, this announcement had. This paper’s research results provide evidence that Pfizer earned negative abnormal returns of –11.22%, and Pharmacia’s shareholders experienced the opposite effect, and gained a 22.40% in abnormal returns. This translates into an overall wealth loss of −$38bn for the two companies combined. These results are statistically significant on the five percent level. The author of this paper suggests that the negative reply from the market is an indication to the pharmaceutical industry that the investors are not interested in further consolidation within this sector. This conclusion is made mainly because this takeover created the world’s largest pharmaceutical company and the world’s third largest company in total, additionally a drug firm holding two major blockbuster drugs, Viagra and Rogaine, as well as becoming the first pharmaceutical company ever to hold more than 10% of the market, and still received a negative reply from the market.

Place, publisher, year, edition, pages
2004.
National Category
Business Administration
Identifiers
URN: urn:nbn:se:su:diva-5048OAI: oai:DiVA.org:su-5048DiVA: diva2:194771
Uppsok
samhälle/juridik
Available from: 2007-01-05 Created: 2007-01-05

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