AstraZeneca rejects Pfizer’s $ 118 b take-it-or-leave-it offer
Wednesday, 21 May 2014 00:23
-
- {{hitsCtrl.values.hits}}
Reuters: Britain’s AstraZeneca on Monday rejected a sweetened and ‘final’ offer from Pfizer, puncturing the US drugmaker’s plan for a merger to create the world’s biggest pharmaceuticals group.
The rebuff came nine hours after Pfizer said on Sunday night it had raised its takeover offer to 55 pounds a share, or around 70 billion pounds ($ 118 billion) in total, and would walk away if AstraZeneca did not accept it.
The rejection left some major shareholders fuming as shares in AstraZeneca slumped 11% to close at 42.88 pounds after falling as much as 15% - their biggest ever intra-day decline. Pfizer rose 1% in New York.
AstraZeneca Chairman Leif Johansson told Reuters he now saw no prospect of a deal with Pfizer before a deadline of May 26 set under British takeover rules, or any likelihood of that deadline being extended.
Experts also said Pfizer had left itself no room to return with a last-minute higher offer due to the strict takeover code.
Pfizer wants to create the world’s largest drugs firm, with a headquarters in New York but a tax base in Britain, where corporate tax rates are lower than in the United States. The plan has met entrenched opposition from AstraZeneca, as well as politicians and scientists who fear cuts to jobs and research.
“It died of multiple wounds. Too little cash, too many suspicions about Pfizer’s motives, and too little confidence in its assurances about jobs,” said Erik Gordon, professor at the University of Michigan’s Ross School of Business. “Pfizer’s chances are going down, despite its offer of a higher price.”
Johansson said he had made clear in discussions with Pfizer that his board could only recommend a bid that was more than 10% above an offer of 53.50 pounds made by Pfizer on Friday, which would amount to at least 58.85 pounds. He blamed Pfizer for calling a halt to discussions after a telephone call lasting more than an hour with Pfizer’s chairman and CEO Ian Read on Sunday afternoon.
In addition to the inadequate price, Johansson also slammed what he said was a lack of industrial logic behind Pfizer’s move; the risks posed to shareholders by the controversial tax plans; and the threat to life science jobs in Britain, Sweden and the United States.
“Pfizer’s approach throughout its pursuit of AstraZeneca appears to have been fundamentally driven by the corporate financial benefits to its shareholders of cost savings and tax minimisation,” Johansson said in a statement.
There has been a mounting political backlash against the proposed deal in Britain, the United States and Sweden, where AstraZeneca has half its roots. The Swedish government launched a concerted effort on Friday against a merger that 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.
British Prime Minister David Cameron has said he wanted more assurances from Pfizer, in the event of a takeover, although as the head of the free-market Conservative Party he does not want to be seen to be deterring foreign corporate investment.
