Pfizer chases AstraZeneca for potential $100 billion deal

Mon Apr 28, 2014 5:28pm EDT
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By Ben Hirschler and Ransdell Pierson

LONDON/NEW YORK (Reuters) - U.S. drugmaker Pfizer Inc approached Britain's AstraZeneca Plc two days ago to reignite a potential $100 billion takeover and was rebuffed, raising investor expectations it will have to increase its offer to close the deal.

Pfizer said on Monday it proposed a takeover to AstraZeneca in January worth 58.8 billion pounds ($98.9 billion), or nearly 47 pounds per share. It had contacted its British rival again on Saturday, seeking to discuss further a takeover.

The chase was welcomed by investors in both companies, as deal-making grips the healthcare industry. AstraZeneca shares were up 11.7 percent at $76.69 in New York on news of the latest offer, which would be the biggest foreign acquisition of a British company and one of the largest pharmaceutical deals. Pfizer shares were up 3.8 percent at $31.92 on the New York Stock Exchange on Monday afternoon.

AstraZeneca said Pfizer's suggested offer undervalued the company "very significantly," adding that Pfizer wanted to pay 70 percent in shares and only 30 percent in cash. AstraZeneca urged its shareholders to take no action and said it remained confident of its independent strategy.

"I feel pretty confident of a higher bid coming," said Neil Veitch, global and UK investment director at SVM Asset Management, which owns AstraZeneca shares. "I think it's more likely than not that we'll see an agreed deal somewhere in that 52 to 53 pound range."

Buying AstraZeneca would boost Pfizer's pipeline of cancer drugs and create significant cost and tax savings. Under British takeover rules, Pfizer has until May 26 to announce a firm intention to make an offer or back away.

The renewed approach comes amid a wave of mergers and acquisitions in the sector, pushing the value of deals to $153 billion so far this year, as the industry restructures amid healthcare spending cuts and competition from cheap generics.

"Society wants products faster, they want more products and they want value," Pfizer Chief Executive Ian Read told reporters. "Industry is responding to society's request for increased efficiencies and productivity."   Continued...

A man walks past Pfizer's world headquarters in New York April 28, 2014. REUTERS/Andrew Kelly