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AstraZeneca rejects new Pfizer offer AstraZeneca rejects new Pfizer offer
(about 1 hour later)
UK drugs firm AstraZeneca has rejected the new takeover offer from Pfizer.UK drugs firm AstraZeneca has rejected the new takeover offer from Pfizer.
The US company had earlier raised the price it was offering for AstraZeneca to the equivalent of £50 a share, valuing the firm at £63bn.The US company had earlier raised the price it was offering for AstraZeneca to the equivalent of £50 a share, valuing the firm at £63bn.
But Astra said the new terms offered were, "inadequate, substantially undervalue AstraZeneca and are not a basis on which to engage with Pfizer".But Astra said the new terms offered were, "inadequate, substantially undervalue AstraZeneca and are not a basis on which to engage with Pfizer".
If the deal were to go through it would be the biggest takeover of a UK company by a foreign firm.If the deal were to go through it would be the biggest takeover of a UK company by a foreign firm.
Pfizer's initial offer in January was worth £46.61 per AstraZeneca share, and was rejected by the UK firm. AstraZeneca employs more than 51,000 staff worldwide, with 6,700 in the UK. Pfizer - whose drugs include Viagra - has a global workforce of more than 70,000, with 2,500 in the UK.
Earlier on Friday, Pfizer had also sent a letter to Prime Minister David Cameron to try to address concerns over the bid. Job pledge
There have been worries that a takeover of AstraZeneca could affect the number of skilled jobs in the UK, where Astra employs about 6,700 people. Announcing Pfizer's new offer, Pfizer chairman and chief executive Ian Read said the firm believed "that there is a highly compelling strategic, business and financial rationale for combining our businesses, with significant benefits for shareholders and stakeholders of both companies".
"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."
Pfizer also sent a letter to Prime Minister David Cameron to try to address concerns over the bid.
On Wednesday, four scientific bodies raised concerns about possible UK lab closures following a Pfizer deal, and a committee of MPs is considering an inquiry into the issue.On Wednesday, four scientific bodies raised concerns about possible UK lab closures following a Pfizer deal, and a committee of MPs is considering an inquiry into the issue.
Pfizer told Mr Cameron it would go ahead with Astra's planned research and development (R&D) base in Cambridge, and retain its Macclesfield manufacturing facilities.Pfizer told Mr Cameron it would go ahead with Astra's planned research and development (R&D) base in Cambridge, and retain its Macclesfield manufacturing facilities.
Pfizer also pledged that if the deal went ahead, 20% of the combined company's R&D workforce would be based in the UK.Pfizer also pledged that if the deal went ahead, 20% of the combined company's R&D workforce would be based in the UK.
The US firm said its commitments would be valid for five years, unless circumstances changed significantly.The US firm said its commitments would be valid for five years, unless circumstances changed significantly.
On Friday, Conservative peer Lord Heseltine called for greater powers for the UK government to intervene in foreign takeovers if crucial UK interests were at risk.On Friday, Conservative peer Lord Heseltine called for greater powers for the UK government to intervene in foreign takeovers if crucial UK interests were at risk.
'Compelling rationale' Defence
AstraZeneca confirmed on Monday that Pfizer had made a takeover approach for the company in January, but said that offer "significantly undervalued" the firm, which employs more than 51,000 staff worldwide. On Monday it emerged that Pfizer had originally made a takeover approach for AstraZeneca in January, worth £46.61 a share, which was rejected.
Announcing Pfizer's new offer, Pfizer chairman and chief executive Ian Read said: "We have seen significant positive market reaction to the announcement we made on April 28, including from the shareholders of both our companies. The latest offer from Pfizer is a mixture of cash and shares equivalent to £50 per AstraZeneca share. If the deal goes through, Pfizer also wants to establish its corporate and tax residence in the UK, as well as its European headquarters.
"The consistent message we have heard reinforces our belief that there is a highly compelling strategic, business and financial rationale for combining our businesses, with significant benefits for shareholders and stakeholders of both companies. AstraZeneca's board said the offer was too low, and that it believed a major driver for Pfizer's takeover was the move to establish a tax residence in the UK by changing its company structure.
"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." "The large proportion of the consideration payable in Pfizer shares and the tax-driven inversion structure remain unchanged. Accordingly, the board has rejected the proposal," AstraZeneca said.
Pfizer - whose drugs include Viagra - has a global workforce of more than 70,000, with 2,500 in the UK. Leif Johansson, chairman of AstraZeneca, added that the company's product "pipeline" of new drugs was "rapidly progressing".
The company said it wanted to establish its corporate and tax residence in the UK, as well as its European headquarters. "Pfizer's proposal would dramatically dilute AstraZeneca shareholders' exposure to our unique pipeline and would create risks around its delivery," Mr Johansson said.
Heather Self, a tax expert at Pinsent Masons, told the BBC: "Pfizer want[s] to put a UK company on top of the whole group which is taking the whole company outside the US tax system."Heather Self, a tax expert at Pinsent Masons, told the BBC: "Pfizer want[s] to put a UK company on top of the whole group which is taking the whole company outside the US tax system."
US federal corporation tax is 35%, while the UK's rate is 21% and is due to be cut to 20% in 2015.US federal corporation tax is 35%, while the UK's rate is 21% and is due to be cut to 20% in 2015.
Ms Self added that a significant tax gain for the UK would be unlikely. But Ms Self added that a significant tax gain for the UK would be unlikely.
"All it will mean is moving a few senior people here and having a few board meetings here. It doesn't mean anything for the UK tax industry," she said."All it will mean is moving a few senior people here and having a few board meetings here. It doesn't mean anything for the UK tax industry," she said.
Labour shadow business secretary Chuka Umunna expressed concerns over job security for AstraZeneca staff.Labour shadow business secretary Chuka Umunna expressed concerns over job security for AstraZeneca staff.
"Pfizer has a very poor record on previous acquisitions. Do we really want a jewel in the crown of British industry, our second biggest pharmaceutical firm, to basically be seen as an instrument of tax planning?" he said."Pfizer has a very poor record on previous acquisitions. Do we really want a jewel in the crown of British industry, our second biggest pharmaceutical firm, to basically be seen as an instrument of tax planning?" he said.