Tom Reese/Paul Rubillo, Dividend.com
Pfizer (PFE) shares are down nearly 10% in early trading, after confirming it would acquire drugmaker Wyeth (WYE) for $68 billion.
Pfizer will pay $50.19 or $33 in cash and 0.985 share of its stock for each Wyeth share. Pfizer announced it would cut 15 percent of the combined company's workforce of about 130,000 employees and close some manufacturing sites.
In addition, the company is cutting its quarterly dividend payout in half, to 16 cents from 32 cents.
The Bottom Line
We had removed the shares of PFE from our “Recommended” list on Nov.12, when the stock was trading at $16.77. The company will now have a 3.67% dividend yield, based on Friday’s closing stock price of $17.45. We said it on Friday when the rumors started to fly that the deal would also be a way for the company to work its dividend lower as well, with the acquisition likely to be a combination of stock and cash. This morning we are hearing that as well as the layoff scenario we also cited would take place. Tough day for some of the employees of this merger deal as well as Pfizer shareholders being hit with a dividend cut.
Pfizer (PFE) is not recommended at this time, holding a Dividend.com Rating of 3.4 out of 5 stars.
Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.
