AstraZeneca knocks back latest approach from US drugs giant Pfizer

2nd May 2014

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While Pfizer is showing no signs of letting AztraZeneca out of its crosshairs, the latest offering from the US drugs giant has endured yet another rejection from the FTSE 100 constituent.

The American firm, and maker of Viagra, today confirmed it had submitted a new proposal, upping its offer to £50 per share, valuing the revamped deal at a massive £63bn.

The latest offer represents a 39% premium to the closing price of £35.86 on 3 January 2014; the trading day immediately prior to the date of Pfizer’s January proposal.

A statement issued by Pfizer said: “The proposal would provide an opportunity for AstraZeneca shareholders to achieve significant value immediately upon closing of the transaction and at the same time participate in the short, medium and long-term value creation expected from the combination.”

Ian Read, Pfizer chairman and chief executive added: ““We believe our proposal is responsive to the views of AstraZeneca shareholders and provides a sound basis upon which to arrive at recommendable terms for the combination of our two companies.”

But a response issued on Friday, where the board of AstraZeneca once again declined to engage said the terms described in Pfizer’s proposal are inadequate and “substantially undervalue” the business and are not a basis on which to engage with Pfizer.

Chairman of AstraZeneca, Leif Johansson said: “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. Pfizer’s proposal would dramatically dilute AstraZeneca shareholders’ exposure to our unique pipeline and would create risks around its delivery. As such, the Board has no hesitation in rejecting the Proposal.”

Pfizer had previously submitted a preliminary, indication of interest to the board of directors of AstraZeneca in January regarding a possible merger transaction.

However after what are described by Pfizer as “limited high-level discussions”, AstraZeneca declined to pursue the matter further. Undeterred, Pfizer contacted AstraZeneca again on 26 April hoping to renew discussions only to be rejected once again.

The proposed merger, which has seen Pfizer’s Read contact the Prime Minister David Cameron is engulfed in controversy, chiefly over fears of potential job losses in the UK, where AstraZeneca employs almost 7,000 people.

Speaking to the Financial Times, Lord Sainsbury, the British philanthropist and former Labour science minister said that any assurances over UK jobs and investment would be “frankly meaningless”.

He added: “It is clear to me that this proposed takeover is going to deal a devastating blow to our profile in the pharmaceutical area.”

The proposed merger has driven AstraZeneca’s share up markedly, where the stock is now up by 15% in the past week alone and 23% better over the last month.

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