Pfizer bid for GSK "has some merits", says Berenberg

LONDON, Aug 1 (Reuters) - Could Pfizer acquireGlaxoSmithKline as a "plan B" after failing to landAstraZeneca? It would be a stretch but not totallyimpossible, according to analysts at Berenberg Bank.

GSK's market capitalisation has slumped to $117 billion, orjust under Pfizer's failed offer for AstraZeneca, following weakquarterly results and a warning on full-year profits last week.

Pfizer would have to offer a premium to that, but even if itpaid $164 billion, or 20 pounds a share, with $74 billion incash, it would still end up with a highly earnings-boostingdeal, the bank said in a note on Friday.

"This is perhaps a stretch, but not totally unrealistic,"the analysts wrote.

Pfizer, which has a market value of $183 billion, declinedto be drawn this week on whether it would renew its bid forAstraZeneca later this year, as it is allowed to do, but said itwas still considering big deals.

Buying a large British drug company is attractive toU.S.-based Pfizer because it would slash its tax bill by movingits tax address to Britain, in a process known as inversion.

GSK and Pfizer already work together through the ViiVHealthcare joint venture in HIV/AIDS, which contains one ofGSK's most promising new drugs, Tivicay.

Acquiring GSK would also bolster Pfizer's vaccine businessand give it a leading position in respiratory medicine, even ifGSK is struggling with competition in this field. There would befurther potential to combine the two firm's mature products.

But there are also good reasons for Pfizer to think veryhard before considering a move on GSK.

The U.S. company is keen to grow in cancer, but GSK has justsold this part of its business to Novartis, and it isinstead bulking up in consumer healthcare, a area Pfizer quitsome years back.

GSK, meanwhile, has said its complex three-way Novartis dealcould create new options, and there has been speculation of apossible break-up of the company several years down the road.

"GSK may just be too large for Pfizer to handle, but as aplan B it has some merits," Berenberg concluded. (Reporting by Ben Hirschler; editing by Jane Baird)