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AstraZeneca board rejects Pfizer's final £69bn takeover bid AstraZeneca board rejects Pfizer's final £69bn takeover bid
(about 1 hour later)
AstraZeneca has rejected Pfizer's £69bn takeover approach, saying the bid undervalues the UK company and poses too many risks.AstraZeneca has rejected Pfizer's £69bn takeover approach, saying the bid undervalues the UK company and poses too many risks.
Leif Johansson, AstraZeneca's chairman, said Pfizer's £55 a share valuation fell short of the price that the US company was told on Saturday it would have to offer. Pfizer had offered £53.50 on Friday but AstraZeneca told Pfizer at the weekend that the price needed to be at least 10% higher. AstraZeneca's shares tumbled 14% to £41.45 on the news.
Leif Johansson, AstraZeneca's chairman, said Pfizer's £55 a share valuation fell short of the price that the US company was told was necessary. A deal would be the biggest foreign takeover of a UK company.
Pfizer had offered £53.50 on Friday but AstraZeneca told Pfizer at the weekend that the price needed to be at least 10% higher, valuing AstraZeneca at about £74bn.
Pfizer announced last night that it would make a final approach at £55 a share that could not be increased. It also increased the cash portion of the bid to 45% from 33% with the rest payable in Pfizer shares.Pfizer announced last night that it would make a final approach at £55 a share that could not be increased. It also increased the cash portion of the bid to 45% from 33% with the rest payable in Pfizer shares.
Johansson said Pfizer had already said its £53.50 approach was its final offer and that the US company did not warn AstraZeneca about last night's increased bid.Johansson said Pfizer had already said its £53.50 approach was its final offer and that the US company did not warn AstraZeneca about last night's increased bid.
He said the approach undervalued the Anglo-Swedish company's prospects for producing new drugs as an independent business. He added that Pfizer's plans to move to the UK for tax purposes and its record for slashing research spending endangered the future of the combined company. He said the approach undervalued the Anglo-Swedish company's prospects for producing new drugs as an independent business.
He added that Pfizer's plans to move to the UK for tax purposes and its record for slashing research spending endangered the future of the combined company.
Johansson said: "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: "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.
"From our first meeting in January to our latest discussion yesterday, and in the numerous phone calls in between, Pfizer has failed to make a compelling strategic, business or value case. The board is firm in its conviction as to the appropriate terms to recommend to shareholders."From our first meeting in January to our latest discussion yesterday, and in the numerous phone calls in between, Pfizer has failed to make a compelling strategic, business or value case. The board is firm in its conviction as to the appropriate terms to recommend to shareholders.
"We have rejected Pfizer's final proposal because it is inadequate and would present significant risks for shareholders, while also having serious consequences for the company, our employees and the life-sciences sector in the UK, Sweden and the US.""We have rejected Pfizer's final proposal because it is inadequate and would present significant risks for shareholders, while also having serious consequences for the company, our employees and the life-sciences sector in the UK, Sweden and the US."
The rejection appears to end a battle between the two companies over what would have been the biggest foreign takeover of a UK company. Pfizer's approach has divided opinion among shareholders with some investors calling for AstraZeneca to negotiate with Pfizer while others have praised AstraZeneca's board for resisting the bid. The rejection appeared to end a battle between the two companies unless AstraZeneca shareholders push the board to accept Pfizer's latest approach.
However, Pfizer said it was considering its options. Johansson told the BBC's Today programme he did not know if the deal was dead.
"I have no idea. This has been going on for quite some time, and in very deep engagement over the whole of the weekend. Pfizer now says this is the final offer - I have to believe them at what they say."
Pfizer's pursuit of AstraZeneca has divided opinion among shareholders with some investors calling for AstraZeneca to negotiate with Pfizer while others have praised AstraZeneca's board for resisting the bid.
The Viagra maker's offer also stoked a political row. Labour accused the government of acting as a cheerleader for Pfizer and threatened to impose a public interest test if a takeover had not been completed before next year's general election.The Viagra maker's offer also stoked a political row. Labour accused the government of acting as a cheerleader for Pfizer and threatened to impose a public interest test if a takeover had not been completed before next year's general election.
At two parliamentary grillings last week, Pfizer's boss, Ian Read, tried to convince MPs that he wanted to invest in UK scientific research but he also admitted that the combined business would have fewer scientists and less research spending than the two companies possess now. Chuka Umunna, the shadow business secretary, said on Twitter that AstraZeneca had rejected Pfizer's "fast buck" business mentality: "I very much welcome the rejection of Pfizer's final offer by the board of AstraZeneca.The right decision for the company and for the country.
AstraZeneca chief executive, Pascal Soriot, told the Guardian last week that AstraZeneca's reputation could be damaged by Pfizer's tax avoidance plans, which will involve Pfizer basing the company in the UK in order to keep its cash pile from the US tax authorities. He also raised concerns about the proposed break-up of the business, which would have AstraZeneca's assets split between three new Pfizer divisions. "We don't want to see the takeover of great British firms driven by financial engineering – we want them to be driven by long-term investment."
At two parliamentary hearings last week, Pfizer's boss, Ian Read, tried to convince MPs that he wanted to invest in UK scientific research but also admitted that the combined business would have fewer scientists and less research spending than the two companies possess now.
AstraZeneca chief executive, Pascal Soriot, told the Guardian last week that AstraZeneca's reputation could be damaged by Pfizer's tax avoidance plans, which will involve Pfizer basing the company in the UK in order to keep its cash pile away from the US tax authorities. He also raised concerns about the proposed break-up of the business, which would have split AstraZeneca's assets between three new Pfizer divisions.