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Pfizer makes increased, ‘final’ £69.3bn proposal to buy AstraZeneca AstraZeneca rejects £69.3bn takeover offer from Pfizer
(about 9 hours later)
US drugs giant Pfizer made what it called a ‘final’ £69.3 billion proposal to buy British rival AstraZeneca late on Sunday, but added it will only proceed with an offer if it gets the recommendation of the AstraZeneca board. AstraZeneca has rejected Pfizer's final £69 billion takeover bid, saying it the US drug giant's offer undervalued the company.
Pfizer said it increased its proposed offer by 15 per cent, raising the cash portion of its proposal from 33 per cent to 45 per cent and lifting the overall value of the offer to £55 a share compared the £ 50 a share offered on May 2. The British pharmaceutical film said the deal would bring “uncertainty and risk” for its shareholders and “undervalues the company and its attractive prospects”.
AstraZeneca shareholders would now receive 1.747 shares in a merged company and £24.76 in cash for each AstraZeneca share. Pfizer, known for manufacturing Viagra, had upped its offer at the last minute on Sunday, raising the cash portion of the proposal and lifting the overall value to £55 a share compared to £50 at the start of May.
Pfizer said it will not make a hostile offer directly to AstraZeneca shareholders and will only proceed with an offer “with the recommendation of the AstraZeneca board.” Leif Johansson, the chairman of AstraZeneca, said: “Pfizer's approach throughout its pursuit of AstraZeneca appears to have been fundamentally driven by the corporate financial benefits to its shareholders of cost savings and tax minimisation.”
The US drugs giant said that in the absence of further discussions or an extension of the deadline for making a firm offer under the UK’s takeover code, its proposal will expire at 5pm on May 26. He claimed that from the time of initial talks in January, the US company had “failed to make a compelling strategic, business or value case”.
“This is the fourth proposal Pfizer has made and Pfizer believes that this final proposal provides a clear basis for AstraZeneca to extend the period for making a firm offer under the code and to meaningfully engage with Pfizer,” said the US company. Pfizer’s plan to take over AstraZeneca and create the world’s biggest drugs company met stiff opposition from its British rival and from politicians and scientists who feared cuts in jobs and research operations as a result of any deal.
Pfizer asked AstraZeneca shareholders to urge the AstraZeneca board to begin “meaningful engagement” with Pfizer and extend the period for negotiating a deal. Ed Miliband was among those to speak out against the takeover, raising concerns about cuts to research and development spending and jobs in Britain.
Ian Read, Chairman and CEO of Pfizer, said: “We have tried repeatedly to engage in a constructive process with AstraZeneca to explore a combination of our two companies. MPs debated the issue in Parliament and Unite worked with unions in the US to try to scupper the deal.
“Following a conversation with AstraZeneca earlier today, we do not believe that the AstraZeneca board is currently prepared to recommend a deal at a reasonable price. Mr Johansson said he shared concerns that a deal would have “serious consequences for the company, our employees and the life sciences sector in the UK, Sweden and the US”.
“We remain ready to engage in a meaningful dialogue but time for constructive engagement is running out. We have said from the beginning that we will remain disciplined in the price we are willing to pay and we will not depart from that guiding principle.” A spokesman for Pfizer said the company wanted to "meaningfully engage" with its rival AstraZeneca on Sunday.
Pfizer also revealed on Sunday that it sent a letter to AstraZeneca’s chairman on Friday May 16 with the terms of an improved proposal worth £53.50 a share but that AstraZeneca indicated that its board believed £53.50 a share “substantially undervalues” the company. Ian Read, chairman and CEO of Pfizer, said: “We have tried repeatedly to engage in a constructive process with AstraZeneca to explore a combination of our two companies."
Pfizer’s plan to take over AstraZeneca and create the world’s biggest drugs company has met stiff opposition from its British rival and also from politicians and scientists who say they fear cuts in jobs and research operations as a result of any deal. Pfizer also revealed on Sunday that it sent a letter to AstraZeneca’s chairman on Friday with the terms of an improved proposal worth £53.50 a share but that AstraZeneca indicated that its board believed it was too low.
Pfizer would locate a merged company’s headquarters in New York but would have its tax base in the United Kingdom to take advantage of Britain’s lower corporate tax rates. The US company planned to locate a merged company’s headquarters in New York but would have its tax base in the United Kingdom to take advantage of Britain’s lower corporate tax rates.
Additional reporting by PA