 "AstraZeneca rejects 'final' $119-bn offer by Pfizer")
Pfizer's pursuit of AstraZeneca may be drawing to a close.
On Monday, AstraZeneca rejected Pfizer's latest - and what it described as its "final" - takeover bid.
In recent weeks Pfizer has made repeated approaches to AstraZeneca, both privately and publicly, and the Anglo-Swedish drug maker has rebuffed them all as too low.
The news sent AstraZeneca's shares down 10.7 per cent, to £43.03, in trading in London on Monday morning. The company's stock had been trading higher in recent weeks as shareholders anticipated an increased offer from Pfizer.
Pfizer, which began its pursuit of a merger last year, has said it will not make a hostile bid for AstraZeneca. Under British takeover rules, Pfizer was given until May 26 to decide whether to make a formal offer or walk away.
A Pfizer spokesman said on Monday that the company was evaluating its options after the latest rejection.
Leif Johansson, the AstraZeneca chairman, said in a statement that Pfizer's pursuit all along "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," Johansson said. "The board is firm in its conviction as to the appropriate terms to recommend to shareholders."
Sunday's offer represented a 45 per cent premium over AstraZeneca's share price before news of Pfizer's interest became public in April and came after a previous offer by Pfizer late on Friday.
The latest proposal would have given AstraZeneca shareholders 1.747 shares of the combined company, and £24.76 in cash for each of their shares. The offer valued each share of AstraZeneca at about £55, or roughly $92.50.
AstraZeneca, which has an attractive portfolio of cancer drugs, has repeatedly said that it can continue to operate as a stand-alone company and has recently talked about the positive results of several clinical trials in an effort to highlight its future prospects.
Pfizer, the maker of best-selling drugs like Lipitor and Viagra, has raised questions about AstraZeneca's prospects as a stand-alone concern and vowed to keep jobs in Britain in a bid to persuade British politicians to support the transaction.
If completed, the deal would be one of the largest acquisitions in the pharmaceutical industry, surpassing Pfizer's takeover of Warner-Lambert 14 years ago. That deal was valued at $90 billion.
Pfizer's pursuit of AstraZeneca has been a contentious one, with both companies seemingly talking past each other.
AstraZeneca said that Pfizer sent a letter to its board of directors on Friday that included an increased, nonbinding offer of cash and stock worth about £53.50 a share.
The board of AstraZeneca again felt the offer was too low and asked Pfizer on Saturday to provide details about several areas of concern, including its plans for cost cuts after a deal and the potential execution risks associated with the transaction, AstraZeneca said.
On Sunday, the companies reconvened on a conference call involving, on the AstraZeneca side, Johansson; Pascal Soriot, the chief executive; and Marc Dunoyer, the chief financial officer; and on Pfizer's side, Ian C Read, the chairman and chief executive; and Frank D'Amelio, the chief financial officer.
On the call, Johansson said, even if other crucial aspects of the deal were satisfactory, the company's board would only be prepared to recommend an offer price that was more than 10 per cent above the Friday bid, or about £58.85, according to AstraZeneca.
Pfizer reiterated that its Friday proposal was final and would not be amended, according to AstraZeneca, but then announced an increased and its final - proposal on Sunday, without prior notice.
The potential combination has also raised concerns among British and American lawmakers.
In Britain, the concern has centred on whether Pfizer would eliminate jobs after a merger and hurt Britain's standing in life sciences research. AstraZeneca employs 51,500 people worldwide, including about 6,700 in Britain.
Pfizer has committed to keep at least 20 per cent of its research and development work force in Britain after a deal and to complete a research-and-development center being built by AstraZeneca in Cambridge, England.
But British politicians have pointed to Pfizer's decision in 2011 to close research centers in Sandwich, England, as a reason to be concerned about its commitment to keeping jobs in Britain. The closing led to the loss of more than 1,500 jobs.
In a series of hearings before Parliament last week, British lawmakers grilled Pfizer's leaders for two days about their motivations and plans behind a potential merger.
On Tuesday, William Bain, a member of the House of Commons business, innovation and skills committee, pressed Read of Pfizer for more details about the company's plans for employment post merger.
"There are no commitments of any substance being made whatsoever," Bain said. "You're telling us you don't know how many R&D staff you're employing. You can't tell us next year how many R&D staff you're employing. Is this really credible? You must have some forward planning about how many staff you're going to employ."
Read later responded, "So, I can't tell today how many people are going to be in research and development in the combined company. I haven't even seen the books of AstraZeneca. I don't know how many people they have today in the UK I don't know how many they have globally. I don't know how many of them are on projects that are duplicate to our projects."
American politicians also have raised questions about the company's plans to reincorporate in Britain after the proposed deal in order to avoid the higher corporate taxes in the United States.
The strategy, known as an inversion, is increasingly popular among American companies, especially in the pharmaceutical industry.
The opposition Labour Party, which had accused Prime Minister David Cameron of cheerleading for the Pfizer bid, welcomed the decision by AstraZeneca.
"The AstraZeneca board has remained resolute and sought to act in the best long-term interests of the company and its vital work in developing new lifesaving drugs," said Chuka Umunna, who speaks for the Labour Party on business issues. "Pfizer has said today that it will not seek to launch a hostile bid and must not renege on this promise."
©2014 The New York Times News Service
On Monday, AstraZeneca rejected Pfizer's latest - and what it described as its "final" - takeover bid.
In recent weeks Pfizer has made repeated approaches to AstraZeneca, both privately and publicly, and the Anglo-Swedish drug maker has rebuffed them all as too low.
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The latest offer, made Sunday evening, was worth about $119 billion. On Monday, AstraZeneca said the increased bid "undervalues the company and its attractive prospects".
The news sent AstraZeneca's shares down 10.7 per cent, to £43.03, in trading in London on Monday morning. The company's stock had been trading higher in recent weeks as shareholders anticipated an increased offer from Pfizer.
Pfizer, which began its pursuit of a merger last year, has said it will not make a hostile bid for AstraZeneca. Under British takeover rules, Pfizer was given until May 26 to decide whether to make a formal offer or walk away.
A Pfizer spokesman said on Monday that the company was evaluating its options after the latest rejection.
Leif Johansson, the AstraZeneca chairman, said in a statement that Pfizer's pursuit all along "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," Johansson said. "The board is firm in its conviction as to the appropriate terms to recommend to shareholders."
Sunday's offer represented a 45 per cent premium over AstraZeneca's share price before news of Pfizer's interest became public in April and came after a previous offer by Pfizer late on Friday.
The latest proposal would have given AstraZeneca shareholders 1.747 shares of the combined company, and £24.76 in cash for each of their shares. The offer valued each share of AstraZeneca at about £55, or roughly $92.50.
AstraZeneca, which has an attractive portfolio of cancer drugs, has repeatedly said that it can continue to operate as a stand-alone company and has recently talked about the positive results of several clinical trials in an effort to highlight its future prospects.
Pfizer, the maker of best-selling drugs like Lipitor and Viagra, has raised questions about AstraZeneca's prospects as a stand-alone concern and vowed to keep jobs in Britain in a bid to persuade British politicians to support the transaction.
If completed, the deal would be one of the largest acquisitions in the pharmaceutical industry, surpassing Pfizer's takeover of Warner-Lambert 14 years ago. That deal was valued at $90 billion.
Pfizer's pursuit of AstraZeneca has been a contentious one, with both companies seemingly talking past each other.
AstraZeneca said that Pfizer sent a letter to its board of directors on Friday that included an increased, nonbinding offer of cash and stock worth about £53.50 a share.
The board of AstraZeneca again felt the offer was too low and asked Pfizer on Saturday to provide details about several areas of concern, including its plans for cost cuts after a deal and the potential execution risks associated with the transaction, AstraZeneca said.
On Sunday, the companies reconvened on a conference call involving, on the AstraZeneca side, Johansson; Pascal Soriot, the chief executive; and Marc Dunoyer, the chief financial officer; and on Pfizer's side, Ian C Read, the chairman and chief executive; and Frank D'Amelio, the chief financial officer.
On the call, Johansson said, even if other crucial aspects of the deal were satisfactory, the company's board would only be prepared to recommend an offer price that was more than 10 per cent above the Friday bid, or about £58.85, according to AstraZeneca.
Pfizer reiterated that its Friday proposal was final and would not be amended, according to AstraZeneca, but then announced an increased and its final - proposal on Sunday, without prior notice.
The potential combination has also raised concerns among British and American lawmakers.
In Britain, the concern has centred on whether Pfizer would eliminate jobs after a merger and hurt Britain's standing in life sciences research. AstraZeneca employs 51,500 people worldwide, including about 6,700 in Britain.
Pfizer has committed to keep at least 20 per cent of its research and development work force in Britain after a deal and to complete a research-and-development center being built by AstraZeneca in Cambridge, England.
But British politicians have pointed to Pfizer's decision in 2011 to close research centers in Sandwich, England, as a reason to be concerned about its commitment to keeping jobs in Britain. The closing led to the loss of more than 1,500 jobs.
In a series of hearings before Parliament last week, British lawmakers grilled Pfizer's leaders for two days about their motivations and plans behind a potential merger.
On Tuesday, William Bain, a member of the House of Commons business, innovation and skills committee, pressed Read of Pfizer for more details about the company's plans for employment post merger.
"There are no commitments of any substance being made whatsoever," Bain said. "You're telling us you don't know how many R&D staff you're employing. You can't tell us next year how many R&D staff you're employing. Is this really credible? You must have some forward planning about how many staff you're going to employ."
Read later responded, "So, I can't tell today how many people are going to be in research and development in the combined company. I haven't even seen the books of AstraZeneca. I don't know how many people they have today in the UK I don't know how many they have globally. I don't know how many of them are on projects that are duplicate to our projects."
American politicians also have raised questions about the company's plans to reincorporate in Britain after the proposed deal in order to avoid the higher corporate taxes in the United States.
The strategy, known as an inversion, is increasingly popular among American companies, especially in the pharmaceutical industry.
The opposition Labour Party, which had accused Prime Minister David Cameron of cheerleading for the Pfizer bid, welcomed the decision by AstraZeneca.
"The AstraZeneca board has remained resolute and sought to act in the best long-term interests of the company and its vital work in developing new lifesaving drugs," said Chuka Umunna, who speaks for the Labour Party on business issues. "Pfizer has said today that it will not seek to launch a hostile bid and must not renege on this promise."
©2014 The New York Times News Service