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AstraZeneca rejects £69 billion Pfizer takeover AstraZeneca rejects £69 billion Pfizer takeover
(about 5 hours later)
British drugs firm AstraZeneca has blasted Pfizer's final offer for the company, claiming the £69 billion bid "undervalues" the company. AstraZeneca has rejected Pfizer’s ‘final’ £69 billion takeover attempt saying it “falls short of AstraZeneca’s value as an independent, science-led company”, sending shares slumping 13% as the City bet the battle was over.
The Viagra maker upped the price it was prepared to pay over the weekend to a deal worth £55 a share, 15% more than its previous proposal on May 2 which also represented its fourth and final approach. AstraZeneca’s chairman, Leif Johansson, said Pfizer’s £55-a-share bid, raised from £50 a fortnight ago and sharply higher than Astra’s last unaffected share price of £35, was “inadequate”.
AstraZeneca said the deal would bring "uncertainty and risk" for its shareholders and "undervalues the company and its attractive prospects". He claimed that Astra’s board would have backed a deal at £58.85, or more than 10% above £53.50, a price Pfizer offered the British drugmaker on Friday — but dismissed the £55 bid.
Chairman Leif 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." Shareholders in the FTSE 100 company today said they were “disappointed and surprised” by its decision.
He said that from the time of initial talks in January, the US company had "failed to make a compelling strategic, business or value case". One top institutional investor said: “AstraZeneca’s board is going to be under huge pressure to prove that the company’s shares are worth £55 or more.
The US company added: "During discussions earlier today, AstraZeneca made clear that it is not currently prepared to accept a price close to Pfizer's £53.50 proposal." “If they languish around the levels they have fallen to today, then Pascal Soriot and his team will be facing unrest. They are going to have to deliver their promises — quickly — or there will be call for change.”
Pfizer chief executive Ian Read said: "We have tried repeatedly to engage in a constructive process with AstraZeneca to explore a combination of our two companies. Asked whether the takeover tussle was over, Johansson said: “I can sincerely say I don’t know. That is up to Pfizer. You have to ask them how they think it’s going to pan out.”
"Following a conversation with AstraZeneca earlier today, we do not believe that the AstraZeneca board is currently prepared to recommend a deal at a reasonable price. Analysts were divided on what happens next. Marc Goodman at UBS wrote: “We still believe Pfizer can find more productive use for $116 billion [£69 billion],” while Panmure Gordon’s Savvas Neophytou noted: “We expect shareholders to press AstraZeneca to accept this new offer but management will likely want to resist.”
"We remain ready to engage in a meaningful dialogue but time for constructive engagement is running out. After a two-hour video conference call between the two sides, AstraZeneca expressed annoyance at Pfizer’s move to go public with the latest approach without giving it warning.
"We have said from the beginning that we will remain disciplined in the price we are willing to pay and we will not depart from that guiding principle.” The US Viagra maker made its latest approach last night, saying its £69 billion offer — which raised the cash component of the deal from around a third to 45% — was “final and cannot be increased”. It added that it would not make a hostile bid and would only proceed with the backing of Astra’s board.
Viagra maker Pfizer wants to create a new pharmaceuticals giant that will be domiciled for tax purposes in the UK. Mr Johansson said the board found that, “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”.
It has already pledged in a letter to Prime Minister David Cameron that any deal would not stop the building of Astra's planned research and development (R&D) hub in Cambridge and that 20% of the combined company's R&D workforce will be in the UK. The chairman added that: “Our investors are a multi-faceted group with different investment horizons. They have elected the board to be independent and come up with a recommendation.”
But Astra believes that Pfizer's board is making a opportunistic attempt to acquire "a transformed AstraZeneca, without reflecting the value of its exciting pipeline". Pfizer has until May 26 to persuade AstraZeneca to enter talks, otherwise  it is banned from making another approach for six months
Chief executive Pascal Soriot said the mega-merger would prove a distraction from its scientific priorities. Astra’s shares lost 640.5p to 4183.5p.
And Pfizer's pledges have also been criticised by the President of the Royal Society, who said they were "vague, come with caveats and have an inappropriate timescale".