Evaluation of the Effectiveness of M&A Transactions in Pharmaceutical Industry

The research is dedicated to analysis and avaluation of synergetic effects in M&A deals. Chosen topic is actual because M&A market has a growing tendency and the type of M&A consulting is highly demanded in the whole sphere of consulting. In the end of 2015 Russian M&A market fell down by 42% comparing to the equal period of the last year and was evaluated at $17.51 mln. The aim of this paper was to test the hypothesis of feasibility of transaction of acquiring Allergan (major botox producer) by Pfizer. It needed to assess an economic effect which could be generated and make clear the reasons why participated companies could be interested in the deal. In order to achieve the main goal the process was planned for 4 steps: 1. To understand the place of synergetic effects in motives of M&A deals 2. To make clear the term of synergy and to understand the reasons of occurring synergy in M&A deals 3. To clarify financial aspects of M&A in the financial market 4. To conduct the M&A analysis in the case of acquiring Allergan by Pfizer for clarifying the economical benefits from the deal. As a result, the hypothesis was approved. Here is almost 3.5 time benefits for Pfizer. Sum of the merged company could be $650 036.2 mln, while separately the sum was $426 594 mln. Premium paid by Pfizer in case of successful merging would be $26 258.4 mln and synergetic effect could reach $223 442.4 mln.