Guggenheim's Longstanding Pfizer Ties Tested Amid Starboard Battle

A high-stakes power struggle has erupted between Pfizer Inc PFE and activist investor Starboard Value, with Wall Street’s dealmaker, Alan Schwartz, and his firm, Guggenheim Partners, caught in the crossfire.

The activist investor had built a $1 billion stake in the U.S. drug maker. The tension peaked when Pfizer’s former CEO Ian Read and former CFO Frank D’Amelio, who initially supported Starboard’s campaign against Pfizer’s current CEO Albert Bourla, unexpectedly reversed their stance.

Read and D’Amelio issued a statement expressing full support for Bourla and the board, though this sudden shift in allegiance left insiders puzzled.

Even more surprising was that the statement was released through Guggenheim, a firm that has enjoyed a close relationship with Pfizer and has earned approximately $172 million in advisory fees since 2011, most recently $48 million from the Seagen deal.

Speculation surrounds the reversal, with Jeff Smith, CEO of Starboard, claiming Pfizer pressured the ex-executives with potential legal consequences and bonus clawbacks.

Despite not playing an official role in the Starboard-Pfizer dispute, Guggenheim finds itself entangled in one of Wall Street’s most contentious activist campaigns.

The Financial Times notes that Pfizer has since turned to rival boutique firm PJT Partners to lead its defense, distancing itself from its long-time advisor in this high-profile clash.

Starboard’s frustration stems from Pfizer’s declining performance since its COVID-19 vaccine windfall. The company has faced criticism for a series of costly acquisitions, including its $43 billion purchase of Seagen.

The FT report highlights that Starboard argues that these moves, along with poor capital allocation, have contributed to Pfizer’s stock dropping over 50% from its pandemic peak. The activist investor will likely push for significant changes, possibly including a leadership overhaul or further divestitures.

With Pfizer’s stagnant revenue growth and limited options for quick fixes, Starboard’s path to reshaping the company remains uncertain.

Pfizer has already implemented cost-cutting measures and sold off divisions, leaving few levers for change.

Price Action: PFE stock is up 0.31% at $29.53 during the premarket session at last check Wednesday.

Read Next:

• FDA Approves Pfizer’s Second Hemophilia Drug Within Six Months

Photo via Shutterstock