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| AstraZeneca rejects 'final' takeover bid from Pfizer | |
| (about 4 hours later) | |
| UK drugs company AstraZeneca has rejected an improved "final" takeover offer from US drugs giant Pfizer. | UK drugs company AstraZeneca has rejected an improved "final" takeover offer from US drugs giant Pfizer. |
| Pfizer had made a new offer of £55 per share, valuing AstraZeneca at about £69bn. | Pfizer had made a new offer of £55 per share, valuing AstraZeneca at about £69bn. |
| But AstraZeneca says the new proposal "undervalues the company and its attractive prospects". | But AstraZeneca says the new proposal "undervalues the company and its attractive prospects". |
| Pfizer's pursuit has been under scrutiny because of fears it would hamper AstraZeneca's drug research and cut jobs. | Pfizer's pursuit has been under scrutiny because of fears it would hamper AstraZeneca's drug research and cut jobs. |
| Controversial deal | Controversial deal |
| Pfizer planned to create the world's largest drug company, with its headquarters in New York, but based in the UK for tax purposes. | Pfizer planned to create the world's largest drug company, with its headquarters in New York, but based in the UK for tax purposes. |
| In a strategy known as "tax inversion" Pfizer could pay the UK corporate tax rate of 20%, rather than the 35% rate applied in the US, if it bought AstraZeneca. | In a strategy known as "tax inversion" Pfizer could pay the UK corporate tax rate of 20%, rather than the 35% rate applied in the US, if it bought AstraZeneca. |
| That plan proved controversial with unions and politicians, as AstraZeneca employs 6,700 people in the UK. | |
| AstraZeneca chairman Leif Johansson said Pfizer's pursuit had been "fundamentally driven" by the corporate financial benefits. | AstraZeneca chairman Leif Johansson said Pfizer's pursuit had been "fundamentally driven" by the corporate financial benefits. |
| "Pfizer has failed to make a compelling strategic, business or value case," he added. | "Pfizer has failed to make a compelling strategic, business or value case," he added. |
| Of the two companies' research and development workforce, Pfizer had said it would retain at least 20% in the UK for at least five years. It had also pledged to base its European HQ in Britain. | |
| AstraZeneca's shares fell by more than 13% after its rejection of the offer. | |
| The BBC's business editor Kamal Ahmed said the deal appeared to be over "unless AstraZeneca's shareholders take an astonishingly aggressive stance and force the board to the negotiating table". | The BBC's business editor Kamal Ahmed said the deal appeared to be over "unless AstraZeneca's shareholders take an astonishingly aggressive stance and force the board to the negotiating table". |
| In its new offer statement, Pfizer chief executive Ian Read said: "We stand by our unprecedented commitments to the UK government." | In its new offer statement, Pfizer chief executive Ian Read said: "We stand by our unprecedented commitments to the UK government." |
| Pfizer had said that its improved offer of £55 per share was "final" and would not be increased. | Pfizer had said that its improved offer of £55 per share was "final" and would not be increased. |
| AstraZeneca shareholders were being offered £24.76 in cash and 1.747 shares in the new firm - worth a combined £55 - for each share currently they hold. | AstraZeneca shareholders were being offered £24.76 in cash and 1.747 shares in the new firm - worth a combined £55 - for each share currently they hold. |
| Pfizer had also promised not to mount a hostile takeover - a direct approach to shareholders of AstraZeneca without the involvement of its board. | Pfizer had also promised not to mount a hostile takeover - a direct approach to shareholders of AstraZeneca without the involvement of its board. |
| Mr Johansson said that he had made clear to Pfizer that his board could only recommend a bid that was at least 10% above an offer of £53.50 made by Pfizer on Friday. | Mr Johansson said that he had made clear to Pfizer that his board could only recommend a bid that was at least 10% above an offer of £53.50 made by Pfizer on Friday. |
| He told Radio 4's Today programme that AstraZeneca had rejected Pfizer's offer for three reasons - that it could create better value for shareholders independently, that a takeover would limit its ability to get drugs to market quickly and that the deal carried a "big execution risk". | He told Radio 4's Today programme that AstraZeneca had rejected Pfizer's offer for three reasons - that it could create better value for shareholders independently, that a takeover would limit its ability to get drugs to market quickly and that the deal carried a "big execution risk". |
| "It's obviously a controversial deal," he added. | "It's obviously a controversial deal," he added. |
| Will Hedden, a trader at spread betting firm IG, said: "With Pfizer saying they won't go hostile, it looks like it is pretty much dead." | Will Hedden, a trader at spread betting firm IG, said: "With Pfizer saying they won't go hostile, it looks like it is pretty much dead." |
| Shareholder anger | Shareholder anger |
| However, some shareholders said they were frustrated by AstraZeneca's decision to reject the offer. | However, some shareholders said they were frustrated by AstraZeneca's decision to reject the offer. |
| A fund manager at a firm that is among the top ten investors in AstraZeneca told Reuters he was "extremely disappointed". | A fund manager at a firm that is among the top ten investors in AstraZeneca told Reuters he was "extremely disappointed". |
| "We do not think the Astra management have done a good job on behalf of shareholders," he added. | "We do not think the Astra management have done a good job on behalf of shareholders," he added. |
| A second shareholder, within the 40 largest investors in AstraZeneca, said: "I think large numbers of shareholders out there will be disappointed." | A second shareholder, within the 40 largest investors in AstraZeneca, said: "I think large numbers of shareholders out there will be disappointed." |
| Edison Investment Research analyst Mick Cooper said AstraZeneca was banking on getting better returns for shareholders by remaining independent than the cash and share combination that Pfizer has offered. | Edison Investment Research analyst Mick Cooper said AstraZeneca was banking on getting better returns for shareholders by remaining independent than the cash and share combination that Pfizer has offered. |
| "AstraZeneca will have six months to demonstrate that it was right to reject Pfizer's offer, or face the prospect of a fresh approach," he said. | "AstraZeneca will have six months to demonstrate that it was right to reject Pfizer's offer, or face the prospect of a fresh approach," he said. |