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Pfizer Inc is preparing to sweeten its bid for AstraZeneca Plc to more than £63 billion ($106 billion) in an attempt to lure the UK's second-biggest drugmaker to the negotiating table, people with knowledge of the matter said.
The offer may value AstraZeneca at more than £50 a share and include a larger cash component, and could come as early as next week, said the people, who asked not to be identified discussing confidential information. The London-based company rejected a cash-and-stock proposal of £46.61 a share. Pfizer will report its earnings on May 5.
The new bid and its timing aren't final and may change, two of the people said. After speaking with some AstraZeneca shareholders, Pfizer sees an offer in the low £50 per-share range gaining their support for the companies to hold talks, two people said.
Pfizer's Chief Executive Officer Ian Read is on a charm offensive in the UK this week and would prefer to negotiate a friendly deal. Buying AstraZeneca would give Pfizer a lower tax rate and a portfolio of experimental cancer drugs.
AstraZeneca's US traded shares rose 2.6 per cent to $81.11 as of 11:44 am in New York on Thursday. The company ended London trading at 4,815 pence a share, or the equivalent of about $81, giving it a market value of £60.8 billion. Pfizer rose 0.7 per cent to $31.50.
The companies have several large investors in common, including BlackRock Inc, Wellington Management Co and Vanguard Group. Pfizer's top-20 shareholders collectively own 27.6 per cent of AstraZeneca, Bloomberg data show.
Government meetings
"Until we see something officially, there is no comment we can provide," said Esra Erkal-Paler, an AstraZeneca spokeswoman. Pfizer spokeswoman Joan Campion declined to comment.
Pfizer's earlier offer, made in January, valued AstraZeneca at £58.8 billion. The proposed deal would be the largest ever in the drug industry and the biggest of a UK company, data compiled by Bloomberg show.
Read met with UK government ministers April 29 to discuss a potential takeover, according to a person familiar with the meetings. The CEO emphasised the American company's plans to carry out research, development and manufacturing in the UK as well as the appeal of the British tax system, the person said.
