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Big-cap investors were profoundly underwhelmed when the Obama administration caused Pfizer Inc. to cancel a $150 billion buyout of another massive pharma, Allergan Plc.
Like most deal-making at this level, there was a lot at stake. Allergan has a portfolio packed with name-brand drugs with long patent lives and a robust generics business. What's more, the deal would have allowed Pfizer to relocate its headquarters to the (extremely) tax-friendly Republic of Ireland and save a ton on payments to Uncle Sam.
Now, normally when a deal like this falls through, the shares take a serious pounding, but the smart money is holding its nerve. In fact, the stock is up just over 10% year to date. That says a lot.
Those investors, along with folks who buy in right now, stand to be richly rewarded in the future.