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Pfizer’s $106 billion sweetened offer to buy AstraZeneca was quickly rejected by its board, which said its terms are “inadequate, substantially undervalue AstraZeneca and are not a basis on which to engage with Pfizer.”“We are showing strong momentum as an independent company, in particular with our exciting, rapidly progressing pipeline, which the Board believes will deliver significant value for shareholders,” says Leif Johansson, chairman of AstraZeneca.
The new offer, which values AstraZeneca shares at $84.47 (£50) is Pfizer’s third attempt to buy the British biopharmaceutical company, following a private offer in January and the more recent offer at the end of April. The new offer, of about one third in cash and two thirds in stock, is 7 percent more than the April proposal and represents a premium of 39 percent to AstraZeneca’s closing price on January 3, the day prior to Pfizer’s first proposal to acquire the UK biopharma.
Though AstraZeneca has an attractive oncology portfolio, many observers were surprised when Pfizer’s intention was first made public as megamergers tend to stifle R&D. But Pfizer hopes to reap tax benefits from establishing its headquarters in Britain and shielding its billions of overseas cash from U.S. taxation.
The idea of Pfizer taking over Britain’s second largest pharmaceutical has caused considerable concern in the United Kingdom, especially since Pfizer closed a research facility in Sandwich, England in 2011 that resulted in the loss of more than 1,500 jobs.
Pfizer’s Chairman and CEO Ian Read wrote a letter to UK Prime Minister David Cameron to assure him of Pfizer’s “commitment to the UK and its life sciences agenda.”
“A combined company would bring together powerful and world leading research expertise in which the world class academic research resources in the “golden triangle” of Oxford, Cambridge and London would represent a vital component, along with the positive environment for inward investment that the UK Government has created,” Read wrote.
Read said that if the merger goes through, Pfizer would establish its corporate and tax headquarters in England, commit to at least 20 percent of its total R&D workforce in the country, establish its European headquarters in the UK, and invite at least two AstraZeneca board members to join the board of the new company.
While the two sides are in a stalemate now, many industry observers believe a merger will go through, especially if Pfizer sweetens the offer a bit further to between £52 and £54 a share.
May 02, 2014
http://www.burrillreport.com/article-astrazeneca_rejects_sweetened_pfizer_offer.html
