AstraZeneca rejects £55 a share Pfizer offer

Monday 19 May 2014 18.27
AstraZeneca rejects latest £55 a share offer from Pfizer
AstraZeneca rejects latest £55 a share offer from Pfizer

Britain's AstraZeneca today rejected a sweetened and "final" offer from Pfizer, leaving it uncertain if the US drugmaker would pull off its plan to create the world's biggest pharmaceuticals group.

The rebuff came after Pfizer said yesterday it had raised its takeover offer to £55 a share, or around £70 billion in total, and would walk away if AstraZeneca did not accept it.

Pfizer wants to create the world's largest drugs company, with a headquarters in New York but a tax base in Britain, where corporate tax rates are lower than in the US.

It has met entrenched opposition from AstraZeneca, as well as many UK politicians and scientists who fear cuts to jobs and research.

AstraZeneca chairman Leif Johansson said he had made clear in discussions with Pfizer that his board could only recommend a bid that was at least 10% above an offer of £53.50 made by Pfizer on Friday, or £58.85.

Pfizer's proposed takeover would be the largest ever foreign acquisition of a British firm and is opposed by many scientists and politicians who fear it will undermine Britain's science base. 

The US group said its new offer was final and could not be increased. It said it would not make a hostile offer directly to AstraZeneca shareholders and would only proceed with an offer with the recommendation of the AstraZeneca board.
              
Pfizer also increased the cash element in its offer to 45%, under which AstraZeneca shareholders would get 1.747 shares in the enlarged company for each of their AstraZenecashares and £24.76 in cash.
              
The new offer represents a 15% premium over the current value of a cash-and-share approach made on May 2 - worth £50 a share at the time - which was also swiftly rejected by AstraZeneca.

Pfizer's chief executive Ian Read said he believed his company's proposal was "compelling" for AstraZeneca shareholders and expressed frustration at its refusal to engage in talks, urging the British company's shareholders to pressure its board to start discussions.
              
"We do not believe that the AstraZeneca board is currently prepared to recommend a deal at a reasonable price," Read said ."We remain ready to engage in a meaningful dialogue but time for constructive engagement is running out."
              
In the absence of further discussions or an extension of the deadline for making a firm offer under British takeover rules, Pfizer's proposal will expire on May 26.
              
The increased offer had been widely expected. Pfizer said last week it would consider a higher offer as it urged AstraZeneca's board to enter talks.
              
The British firm has laid out details of its pipeline of new drugs and argues it has no need for a deal.
              
Investors have backed AstraZeneca in rejecting £50 a share, but several have said they would want it to engage in discussions if Pfizer came back with an improved offer. They fear AstraZeneca shares will tumble if Pfizer walks away.
              
There has been a mounting political backlash against the proposed deal in Britain, the US and Sweden, where AstraZeneca has half its roots.
              
The Swedish government launched a concerted effort on Friday against a merger it fears will lead to cuts in science jobs and research, echoing concerns aired by British lawmakers at two parliamentary hearings last week and fears for US jobs in states where AstraZeneca has a large presence.