See you later? Slim Pfizer deal hopes prop up AstraZeneca

Wed May 21, 2014 11:47am EDT
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By Ben Hirschler and Anjuli Davies

LONDON (Reuters) - Pfizer's (PFE.N: Quote) chances of striking a deal to buy AstraZeneca (AZN.L: Quote) in the coming days look vanishingly small, but the notion it could return later this year is propping up the British drugmaker's shares.

The stock rose 3 percent on Wednesday, despite AstraZeneca insisting on Tuesday there wasn't the slightest chance of Pfizer's $118 billion offer being increased by a May 26 deadline set by UK takeover rules.

While Pfizer agrees it cannot raise its final offer of 55 pounds a share, its advisers have been urging investors to speak up against AstraZeneca's decision to reject its proposal, according to several people familiar with the matter.

One suggestion now circulating is that disgruntled AstraZeneca shareholders could call an extraordinary general meeting (EGM) to put Pfizer's offer to a vote. The support of just 5 percent of shareholders is needed to call such a meeting.

Even if shareholders wanted to revive the bid - or oust the board - an EGM would not come in time to rescue the current process before the takeover rules deadline, but they could force AstraZeneca to open communications with Pfizer in late August, after a compulsory three-month cooling-off period.

"Some of the more active hedge funds, instead of selling out are buying in," said one hedge fund investor. "There has been sufficient shareholder dissatisfaction about this deal that investors can use that to get a favourable outcome further down the road."

The only way a deal could be salvaged this month would be for AstraZeneca Chairman Leif Johansson and his board to make a complete U-turn and recommend Pfizer's current 55-pound offer, which looks out of the question.

More leading shareholders spoke out publicly on the deal on Wednesday, but they didn't speak with one voice, underlining the challenge facing the Pfizer camp in trying to stir an investor rebellion.   Continued...

The Pfizer logo is seen at their world headquarters in New York April 28, 2014. REUTERS/Andrew Kelly