Does Pfizer really want Bristol-Myers? Likely, says one analyst. What's it waiting for?

Pfizer HQ
Pfizer may be waiting for clarity around U.S. tax reform before pursuing a deal for Bristol-Myers Squibb, Credit Suisse analyst Vamil Divan says.

Investors have had a pointed question for Credit Suisse analysts lately: Is Pfizer buying Bristol-Myers Squibb a question of when, not if?

The way analyst Vamil Divan sees it, maybe so. “We remain of the mindset that Pfizer is interested in Bristol-Myers,” he wrote to clients—but that the company would hold off on pursuing such a big deal until it has “more clarity on corporate tax reform efforts.”

And while the New York pharma giant may also be waiting for “further visibility” on Bristol-Myers’ Opdivo-Yervoy trial in first-line lung cancer patients, Divan doesn’t think that’s the real holdup, as other analysts have suggested.

Pfizer may feel that answers around that trial are “less necessary, as BMY’s portfolio will have an important place in the I-O market longer-term regardless of the outcome,” he wrote.

While Pfizer’s execs started off the year claiming that “if we see a deal we think works today with the cards we’ve been dealt, I don’t know why would we would wait”—as CFO Frank D’Amelio put it during January’s J.P. Morgan Healthcare Conference—lately, they’ve been singing a different tune.

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Just one quarter after insisting that his company would “continue to do BD where we see value for our shareholders” instead of waiting for clarity on possible tax code revisions, in May, Pfizer CEO Ian Read listed uncertainty around U.S. tax reform as reasons to hold still on the dealmaking front.

The idea that Pfizer may want to see how U.S. tax reform efforts play out makes plenty of sense, considering the hefty load of cash the company’s storing overseas. If tax changes make it less expensive to bring that money home, the company could wind up with a lot more funds for dealmaking.

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That doesn’t mean the company will run to buy Bristol-Myers, though, Bernstein’s Tim Anderson has said. Pfizer has “proven itself to be a very transparent company,” he pointed out in June, and it’s said repeatedly that it’s committed to its current I-O setup: the Merck KGaA partnership that produced Bavencio.

Meanwhile, Divan expects to see some clarity sooner rather than later in one area of Pfizer’s business—and that’s consumer healthcare, a unit that’s been buzzed about for a potential divestment.

As Divan figures, Pfizer won't hang onto the division, as “it is becoming clearer to us that PFE does not see that as part of their long-term innovative core,” he wrote.