Oppenheimer Has Thoughts On Pfizer, King Merger (PFE, KG)

Oppenheimer & Co. is out with a research report discussing Pfizer Inc.'s PFE purchase of King Pharmaceuticals, Inc. KG yesterday. In the research note, Oppenheimer writes, "On 10/12, KG announced a definitive agreement to be acquired by Pfizer for $3.6B, or $14.25 per share, in an all-cash deal. (1) The $3.6B take-out price implies 7.4x our estimated 2011 EBITDA, and 2.2x our estimated 2011 revenue, which we believe to be fair. (2) We believe PFE was attracted by potential synergies with KG's animal health and pharmaceutical business. (3) Based on our analysis of Wolter's Kluwer data demonstrating market share for the combined entities' products, we see little probability of anti-trust issues. (4) We do not believe another acquirer is likely to offer a higher bid, and as such, we change our rating to Not Rated from Perform."