Pfizer, a leading pharmaceutical company, acquired drug maker Pharmacia for $60 billion. The purchase price represented a 34% premium to Pharmacia’s preannouncement price. Pfizer was betting that size is what mattered in the new millennium. As the market leader, Pfizer was finding it increasingly difficult to sustain the double-digit earnings growth demanded by investors. Such growth meant the firm needed to grow revenue by $3 billion to $5 billion annually while maintaining or improving profit margins. This became more difficult due to the skyrocketing costs of developing and commercializing new drugs. Expiring patents on a number of so-called blockbuster drugs intensified pressure to bring new drugs to market. In your judgment, what were Pfizer’s primary motivations for acquiring Pharmacia? Categorize these in terms of the primary motivations for mergers and acquisitions discussed in this chapter.