Pfizer’s deal to acquire Wyeth leaves it with a massive amount of real estate. Pfizer has decided to close certain Wyeth operations in Pennsylvania and New Jersey, while keeping Wyeth’s “corporate headquarters” building in Madison, NJ. More Wyeth sites could be closed in early 2010.
Sadly, for Pfizer shareholders, the company didn’t seriously consider shutting down its pricey executive digs on East 42nd Street in Manhattan. Ditto for the Wyeth facility in Madison, NJ. Pfizer has struggled in recent years and its management has made an impressive string of bad decisions. The company’s decision has been to dump cheap real estate in favor of more impressive, but less functional, property in Manhattan.
This is really about sacred cows. We’ve seen it from Pfizer in the past. As they’ve acquired Pharmacia and Warner-Lambert, Pfizer has created sacred cows and put certain things off limits – usually Pfizer’s management, Pfizer’s products and Pfizer’s locations. When you create a merger like this, you should put everything on the table and make the best decision possible.
Standard & Poor’s wasted no time in cutting Pfizer’s bond rating two notches from AAA to AA. Moody’s and Fitch both also cut Pfizer’s rating. In January, Pfizer cut its dividend to finance the Wyeth acquisition. There is considerable speculation that Pfizer will completely eliminate its dividend when the Pfizer board meets later this year.
