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Pfizer confirmed on Monday that it had ended its audacious bid to buy AstraZeneca, Britain's second-largest pharmaceutical company.
In a statement, the company said it "does not intend to make an offer for AstraZeneca" in the wake of the rejection of what Pfizer called its final offer earlier this month. The cash-and-stock offer, which valued AstraZeneca at about $119 billion, would have created the world's largest drug company.
Pfizer had indicated that it would not pursue a hostile bid, which would allow AstraZeneca's shareholders to vote on the deal without the approval of AstraZeneca's board. Under British takeover rules, Pfizer cannot come back with another offer for AstraZeneca for six months. The earliest it could offer a higher price would be in three months, if AstraZeneca's board agreed to the talks.
"We continue to believe that our final proposal was compelling and represented full value for AstraZeneca based on the information that was available to us," Ian C Read, Pfizer's chairman and chief executive, said in a statement. "As we said from the start, the pursuit of this transaction was a potential enhancement to our existing strategy."
The advances by Pfizer, the maker of best-selling drugs like Lipitor and Viagra, pitted two of the world's largest drug makers against each other. Powerful political forces on both sides of the Atlantic weighed in on corporate taxes, cancer research and the potential effect on jobs in Britain, where an economic recovery is underway but employment remains shaky.
Pfizer made several offers, all of which were rebuffed by AstraZeneca's board. The directors said the latest offer, made on May 18, "undervalues the company and its attractive prospects."
Pfizer's final offer valued the company at nearly £70 billion at a time when AstraZeneca's market capitalisation was roughly £55 billion. AstraZeneca demanded an offer of more than £74 billion.
That Pfizer was unable to use its vast clout to woo its smaller rival, whose performance had been less than spectacular, is a coup for AstraZeneca.
The company staged a spirited defence, arguing that its drug development pipeline, dry not long ago, was chock-full of promising new drugs, among them MEDI4736, a lung cancer drug, which some analysts believe could be worth up to $6 billion.
AstraZeneca played up Pfizer's interest, if the merger were to go through, to relocate to Britain for tax purposes, a tactic known as an inversion. Such a deal would allow Pfizer to escape a higher American corporate tax rate and free its overseas earnings from any claims by United States tax collectors.
British politicians weighed in, arguing that Pfizer should guarantee jobs, even though AstraZeneca has eliminated plenty of them.
By the end of the bidding process, AstraZeneca shareholders were split on company's decision to balk at the deal.
Its largest shareholder, BlackRock, supported its decision to walk away but wanted AstraZeneca to renew its talks with Pfizer about a potential deal at a later date, according to a person familiar with the discussions.
Last week, the AXA Group's British investment arm, which owns less than 1 percent of AstraZeneca, said the company's board should allow shareholders to vote on Pfizer's offer.
Schafer Cullen Capital Management, a New York investment manager; the British asset manager Schroders; and Jupiter Fund Management also have encouraged AstraZeneca to restart negotiations.
Other shareholders have voiced support for AstraZeneca's board, including Fidelity Worldwide Investment, Threadneedle Asset Management, Investor AB of Sweden, and the influential fund manager Neil Woodford of Woodford Investment Management.
AstraZeneca is now under pressure to achieve ambitious performance targets that it released to defend its bid to stay independent.
Many analysts expect more fireworks in the months to come.
©2014 The New York Times News Service
