The Telegraph
Tuesday , May 20 , 2014
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Pfizer offer fails to win over Astra

London, May 19 (Reuters): Britain’s AstraZeneca on Monday rejected a sweetened and “final” offer from Pfizer, undermining the US drug maker’s plan for a merger to create the world’s biggest pharmaceuticals group.

The rebuff came nine hours after Pfizer said on Sunday it had raised its takeover offer to 55 a share, or around 70 billion ($118 billion) in total, and would walk away if AstraZeneca did not accept it.

Shares in AstraZeneca tumbled 13 per cent to 42 by late morning as prospects of a takeover ebbed away. Some major shareholders expressed annoyance at the board’s stance.

Pfizer wants to create the world’s largest drug firm, with headquarters in New York but a tax base in Britain, where corporate tax rates are lower than in the US.

The plan has met entrenched opposition from AstraZeneca as well as politicians and scientists who fear cuts in jobs and research.

“It died of multiple wounds. Too little cash, too many suspicions about Pfizer’s motives, and too little confidence in its assurances about jobs,” said Erik Gordon, professor at the University of Michigan’s Ross School of Business. “Pfizer’s chances are going down, despite its offer of a higher price.”

AstraZeneca chairman Leif Johansson said he had made it clear in discussions with Pfizer that his board could only recommend a bid that was at least 10 per cent above an offer of 53.50 made by Pfizer on Friday, or 58.85.

In addition to the inadequate price, Johansson also slammed the lack of industrial logic behind Pfizer’s move; the risks posed to shareholders by the controversial tax plans; and the threat to life science jobs in Britain, Sweden and the US.

“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,” Johansson said.

“From our first meeting in January to our latest discussion yesterday, and in the numerous phone calls in between, Pfizer has failed to make a compelling strategic, business or value case.”

Johansson’s refusal to engage in discussions angered some shareholders, with one fund manager at a top-10 investor in the group saying: “We do not think the Astra management have done a good job on behalf of shareholders.”

The US group said its new offer was final and could not be increased. It said it would not make a hostile offer directly to AstraZeneca shareholders and would only proceed with an offer with the recommendation of the British company’s board.