Pfizer investors support CEO who is 0 for 2 on megamergers

Pfizer ($PFE) CEO Ian Read walked away from its $160 billion merger with Allergan ($AGN) this week after U.S. Treasury Department rule changes sucked the value out of its tax inversion benefits. But Pfizer investors are not walking away from Read, even though this was the second time he was unable to pull off a major merger.

Reuters polled 10 of the company's investors and found that all of them are still Read supporters, giving him credit for everything he has accomplished with Pfizer up to now. As for the failed deal with Allergan, well they see that as the fault of the U.S. government, not anything Read did wrong. And heck, Pfizer shares were up 5% after it dumped the deal.

"Read shouldn't be the fall guy," agreed Tony Scherrer at Smead Capital Management, a longtime investor in Pfizer.

The collapse of the Allergan deal this week came about two years after Read and Pfizer were rebuffed by AstraZeneca ($AZN) shareholders for a nearly $120 billion deal that also would have gotten Read the tax rate cut he craved. That deal was influenced by British politicians who were adamantly opposed to seeing one of their few Big Pharma players taken over by a U.S. company.

Investors like Oliver Marti, portfolio manager at Columbus Circle Investors, say Read "has made some very smart decisions" after taking over the weakened company in 2010. The Allergan deal was smart as well, he said. "You work within the rules as best you can to win the game," Marti said. "Unfortunately, the Treasury has abused its authority and made up its own rules."

And a nice touch was the fact that Pfizer and Allergan agreed to a breakup fee of only $150 million for deal that saving investors billions of dollars when it lapsed.

Read wouldn't comment to Reuters, but Allergan CEO Brent Saunders did. "While I'm sure Ian is personally disappointed, he hasn't skipped a beat and is absolutely focused on Pfizer and its independent future," Saunders said, noting both companies had backup plans.

In fact, hours after the deal was called off, Allergan announced a $3.3 billion licensing deal for global rights to a portfolio of drugs for neurological disorders from the U.K.'s Heptares.

As for Pfizer, Read has said the company is now back on schedule to decide by year-end whether to break into two separate businesses, something many investors have been waiting for. It had postponed that decision to 2018 after striking the Allergan deal. Pfizer is also back in the hunt for deals that can punch up its value, Read said after Pfizer called off the Allergan merger.

Investors' feelings about Read were epitomized by Gary Bradshaw, a portfolio manager for the Hodges Funds in Dallas who told the news service that "Read gets an 'A' for effort. It was the right move for him to give Allergan a shot."

- here's the Reuters story

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