AstraZeneca Plc rejected Pfizer Inc.’s sweetened takeover proposal, saying the 63.1 billion-pound ($106.5 billion) offer fails to recognize the value of the promising experimental medicines under development by the U.K.’s second-biggest drugmaker.
The offer, which values AstraZeneca at 50 pounds a share in cash and stock, still relies too heavily on equity, London-based AstraZeneca said in a statement today. AstraZeneca earlier rejected a proposal of 46.61 pounds a share, announced April 28.
“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,” AstraZeneca Chairman Leif Johansson said in the statement. “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 raised its bid after Chief Executive Officer Ian Read met with AstraZeneca shareholders and government officials in the U.K. Pfizer sent a letter to Prime Minister David Cameron pledging to follow through on AstraZeneca’s plan to build a substantial campus in Cambridge, England, and to keep key scientific management at the site.
Photographer: Jason Alden/BloombergAstraZeneca offices near Cambridge, U.K. Close
AstraZeneca offices near Cambridge, U.K.
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OpenPhotographer: Jason Alden/BloombergAstraZeneca offices near Cambridge, U.K.
AstraZeneca dropped 0.3 percent to 48.01 pounds at 11:06 a.m. in London. Pfizer fell 0.4 percent yesterday to close at $31.15 in New York.
Tax Rate
Buying AstraZeneca would give Pfizer a lower tax rate because the combined company would be a corporate resident of England. The company, which would maintain its headquarters in New York, also would gain a portfolio of experimental cancer drugs from the purchase.
AstraZeneca in its April 28 statement rejecting the initial offer said Pfizer’s decision to move its tax domicile to the U.K. may be problematic. The U.K. company highlighted that issue in today’s statement.
Pfizer’s earlier offer, made in January, valued AstraZeneca at 58.8 billion pounds. The acquisition would be the largest ever of a U.K. company, according to data compiled by Bloomberg, and would create the world’s biggest drugmaker by sales.
“The consistent message from leading shareholders reinforces our belief that there is a highly compelling strategic, business and financial rationale for combining our businesses, with significant benefits for all our stakeholders,” Read said in a letter to Johansson. “We believe our revised terms will be viewed by the market as a basis for engagement.”
Cash Mix
Stockholders would get 15.98 pounds in cash and 1.845 shares of the combined company for each share in AstraZeneca, Pfizer said. The new bid is 7.3 percent above the previous proposal and is 39 percent above the closing price Jan. 3, before AstraZeneca made its initial offer.
The new proposal consists of about 32 percent cash and 68 percent stock, versus about 30 percent cash and 70 percent stock in the original offer. AstraZeneca said April 28 the initial bid “very significantly undervalued” the company, and said it was concerned that too much of the payment was in stock rather than cash.
Pfizer, in the letter to Cameron, pledged to keep at least 20 percent of the combined company’s research and development workforce in the U.K., retain “substantial” manufacturing facilities at AstraZeneca’s site in Macclesfield, England, and invite at least two AstraZeneca directors to join Pfizer’s board.
Limited Commitment
The U.S. company is committing to the steps for at least five years, “recognizing our ability, consistent with our fiduciary duties, to adjust these obligations should circumstances significantly change,” according to the Pfizer statement.
AstraZeneca employs almost 2,000 people in Macclesfield, and the company is in the process of moving its corporate headquarters from London to Cambridge.
“We have been having very tough conversations with Pfizer,” David Willetts, the U.K.’s minister for universities and science, said today in an interview with BBC Radio 4. “This is ultimately going to be a decision for AstraZeneca shareholders. We think a smart company would itself want to be backing one of the best places to do business. I think Pfizer have been picking up on those messages.”
To contact the reporter on this story: Phil Serafino in Paris at pserafino@bloomberg.net
To contact the editors responsible for this story: Phil Serafino at pserafino@bloomberg.net Kristen Hallam
The offer, which values AstraZeneca at 50 pounds a share in cash and stock, still relies too heavily on equity, London-based AstraZeneca said in a statement today. AstraZeneca earlier rejected a proposal of 46.61 pounds a share, announced April 28.
“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,” AstraZeneca Chairman Leif Johansson said in the statement. “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 raised its bid after Chief Executive Officer Ian Read met with AstraZeneca shareholders and government officials in the U.K. Pfizer sent a letter to Prime Minister David Cameron pledging to follow through on AstraZeneca’s plan to build a substantial campus in Cambridge, England, and to keep key scientific management at the site.
AstraZeneca offices near Cambridge, U.K.
Close
OpenPhotographer: Jason Alden/BloombergAstraZeneca offices near Cambridge, U.K.
AstraZeneca dropped 0.3 percent to 48.01 pounds at 11:06 a.m. in London. Pfizer fell 0.4 percent yesterday to close at $31.15 in New York.
Tax Rate
Buying AstraZeneca would give Pfizer a lower tax rate because the combined company would be a corporate resident of England. The company, which would maintain its headquarters in New York, also would gain a portfolio of experimental cancer drugs from the purchase.
AstraZeneca in its April 28 statement rejecting the initial offer said Pfizer’s decision to move its tax domicile to the U.K. may be problematic. The U.K. company highlighted that issue in today’s statement.
Pfizer’s earlier offer, made in January, valued AstraZeneca at 58.8 billion pounds. The acquisition would be the largest ever of a U.K. company, according to data compiled by Bloomberg, and would create the world’s biggest drugmaker by sales.
“The consistent message from leading shareholders reinforces our belief that there is a highly compelling strategic, business and financial rationale for combining our businesses, with significant benefits for all our stakeholders,” Read said in a letter to Johansson. “We believe our revised terms will be viewed by the market as a basis for engagement.”
Cash Mix
Stockholders would get 15.98 pounds in cash and 1.845 shares of the combined company for each share in AstraZeneca, Pfizer said. The new bid is 7.3 percent above the previous proposal and is 39 percent above the closing price Jan. 3, before AstraZeneca made its initial offer.
The new proposal consists of about 32 percent cash and 68 percent stock, versus about 30 percent cash and 70 percent stock in the original offer. AstraZeneca said April 28 the initial bid “very significantly undervalued” the company, and said it was concerned that too much of the payment was in stock rather than cash.
Pfizer, in the letter to Cameron, pledged to keep at least 20 percent of the combined company’s research and development workforce in the U.K., retain “substantial” manufacturing facilities at AstraZeneca’s site in Macclesfield, England, and invite at least two AstraZeneca directors to join Pfizer’s board.
Limited Commitment
The U.S. company is committing to the steps for at least five years, “recognizing our ability, consistent with our fiduciary duties, to adjust these obligations should circumstances significantly change,” according to the Pfizer statement.
AstraZeneca employs almost 2,000 people in Macclesfield, and the company is in the process of moving its corporate headquarters from London to Cambridge.
“We have been having very tough conversations with Pfizer,” David Willetts, the U.K.’s minister for universities and science, said today in an interview with BBC Radio 4. “This is ultimately going to be a decision for AstraZeneca shareholders. We think a smart company would itself want to be backing one of the best places to do business. I think Pfizer have been picking up on those messages.”
To contact the reporter on this story: Phil Serafino in Paris at pserafino@bloomberg.net
To contact the editors responsible for this story: Phil Serafino at pserafino@bloomberg.net Kristen Hallam
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