AstraZeneca turns down Pfizer’s $117-billion bid

LONDON - Agence France-Presse

AstraZeneca has rejected a sweetened 55-pounds-a-share offer from Pfizer.

British drugs giant AstraZeneca rejected yesterday a final takeover bid from U.S. rival Pfizer worth $117 billion, saying it undervalued the firm and created uncertainty and risk for shareholders.

Pfizer had made an improved and final offer worth 85 billion euros or 69 billion on May 18, pitched at 55 per share, but said it would not proceed without a recommendation.

The battle is the latest in a series of recent huge moves by companies in the pharmaceutical and health care sectors to create world-scale alliances.

The Pfizer bid has taken on strong political overtones in Britain where there is concern that the center of strategic decision-making might move abroad, that jobs might be cut and research in Britain eventually scaled back.        

“We have rejected Pfizer’s final proposal because it is inadequate and would present significant risks for shareholders, while also having serious consequences for the company, our employees and the life-sciences sector in the UK, Sweden and the U.S.,” said AstraZeneca chairman Leif Johansson.

Tax issues

On May 16, Pfizer, which makes Viagra, had lifted its proposal to 53.50 per share, from the previous level of 50.

However, AstraZeneca declared that it would only be prepared to recommend an offer of more than 10 percent above the 53.50 level, indicating a price of 58.85 or 3.85 more than the latest offer on May 18.

“The final proposal is a minor improvement which continues to fall short of the board’s view of value and has been rejected,” said Johansson. He added: “As an independent company, the entire value of AstraZeneca’s (drugs) pipeline will accrue to our shareholders. Under Pfizer’s final proposal, this value would be significantly diluted.”
     
Under the latest bid, Pfizer shareholders would own approximately 73 percent of the new firm, while the British group’s shareholders would hold 27 percent.      

AstraZeneca, which has repeatedly snubbed Pfizer’s takeover attempt, attacked the bid for offering to establish its corporate and tax residency in England.

Pfizer wants to create a new pharmaceuticals giant which would be domiciled for tax purposes in Britain. “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,” added Johansson.

This appeared to be a reference to big tax charges which would fall due on profits held abroad should Pfizer decide to transfer them to the United States. “From our first meeting in January to our latest discusssion yesterday, and in the numerous phone calls in between, Pfizer has failed to make a compelling strategic, business or value case,” Johansson said.

 Pfizer had stated on May 18 that its latest offer was the fourth and final approach, adding that it would not go hostile..