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| Pfizer confirms bid interest in AstraZeneca | Pfizer confirms bid interest in AstraZeneca |
| (about 3 hours later) | |
| US drugs giant Pfizer has confirmed it has contacted AstraZeneca over a possible multi-billion pound takeover. | US drugs giant Pfizer has confirmed it has contacted AstraZeneca over a possible multi-billion pound takeover. |
| Pfizer said it made an initial approach in January, but after "limited high-level discussions" AstraZeneca discontinued the talks on 14 January. | Pfizer said it made an initial approach in January, but after "limited high-level discussions" AstraZeneca discontinued the talks on 14 January. |
| However, it said recent market developments had prompted it to approach AstraZeneca for a second time. | However, it said recent market developments had prompted it to approach AstraZeneca for a second time. |
| "AstraZeneca again declined to engage. Pfizer is currently considering its options," Pfizer said in a statement. | "AstraZeneca again declined to engage. Pfizer is currently considering its options," Pfizer said in a statement. |
| If the deal went through, it would mark the largest takeover of a UK firm by a foreign company. | If the deal went through, it would mark the largest takeover of a UK firm by a foreign company. |
| Pfizer said its initial offer in January was a combination of cash and shares worth £46.61 per AstraZeneca share, worth £58.8bn in total. | |
| At the time, it represented a 30% premium to AstraZeneca's share price, although AstraZeneca's share price has since increased and on Monday morning it jumped nearly 15% to £46.88p | |
| Pfizer said the deal was "a highly compelling opportunity" for AstraZeneca's shareholders. | Pfizer said the deal was "a highly compelling opportunity" for AstraZeneca's shareholders. |
| It said if the takeover went through, the combined firm would have management in both the US and the UK, but would list its shares on the New York Stock Exchange. | It said if the takeover went through, the combined firm would have management in both the US and the UK, but would list its shares on the New York Stock Exchange. |
| "We have great respect for AstraZeneca and its proud heritage," said Pfizer chairman and chief executive Ian Read. | "We have great respect for AstraZeneca and its proud heritage," said Pfizer chairman and chief executive Ian Read. |
| Pfizer said it would only make a firm offer if AstraZeneca directors voted unanimously in favour of the deal. | Pfizer said it would only make a firm offer if AstraZeneca directors voted unanimously in favour of the deal. |
| "The strategic, business and financial rationale for a transaction is compelling," it added. | "The strategic, business and financial rationale for a transaction is compelling," it added. |
| Hostile move? | |
| Buying AstraZeneca would give Pfizer, which makes Viagra among other drugs, access to a number of cancer and diabetes drugs. | |
| However, Justin Urquhart Stewart, head of corporate development at Seven Investment Management, told the BBC the price Pfizer is offering was still too low to secure a deal. | |
| "It's too close to what it is priced at in the market," he said. | |
| "They've tried to talk to the management and gain agreement but that's not happened so they are considering now going directly to the shareholders". | |
| Citi analyst Andrew Baum said he believed there was now a 90% chance that Pfizer would acquire AstraZeneca for at least around £49 a share. | |
| Linda Yueh, the BBC's chief business correspondent, notes that AstraZeneca is a key UK firm in the area of research and development (R&D) and also in exports. | |
| "AstraZeneca's £7bn of drugs sold every year accounts for a whopping 2.3% of British goods exports," she added. | |
| AstraZeneca has eight sites across the UK and around 6,700 employees. However, it has already laid off thousands of staff as it shrinks its cost base to cope with a fall in sales due to patent losses on blockbuster medicines. | |
| In April, it posted a drop in first quarter profits after its earnings were by hit by patents expiring on some of its older medicines. | |
| Pre-tax profits in the quarter fell to $638m (£380m), down from $1.3bn in the same period last year. | |
| Pfizer has made other major acquisitions, its most recent being the $68bn (£40.4bn) purchase of Wyeth in 2009. | |
| However, this would mark its biggest foreign acquisition. | |
| It would also be the largest foreign takeover of a British firm, beating some of the more recent deals which include: | |
| However, the BBC's business editor, Kamal Ahmed, warned Pfizer's takeover approach could turn into a lengthy battle. | |
| "If AstraZeneca does not engage, and it hasn't so far, this bid could turn hostile," he said. |