AstraZeneca shares jump on Pfizer takeover approach reports
Pascal Soriot, chief operating officer of Roche Pharma, speaks at a news conference in Basel, Switzerland, on Wednesday, February 3 2010©Bloomberg
US shares in AstraZeneca jumped on Monday after reports of a $100bn takeover approach by Pfizer that would have been the biggest pharmaceuticals deal in industry history if accepted.
Neither company would comment on the reports that the pair held informal talks several months ago but had since ended the discussions.
But one prominent sector analyst predicted Pfizer was likely to revive its interest in future, attracted by AstraZeneca’s promising pipeline of experimental cancer drugs and the potential for big cost savings between the companies.
Andrew Baum, analyst at Citigroup, said Pfizer’s reported interest “looks highly probable” and he expected the US company “to push aggressively ahead with a second approach”.
London’s stock market was closed for Easter on Monday but American Depositary Receipts in AstraZeneca were up 5.5 per cent in New York in morning trade after the reports from the Sunday Times and Bloomberg while Pfizer’s were up 5.5 per cent.
Any deal would herald the return of megamergers to the pharmaceuticals sector after a period when they had appeared to fall out of favour with companies and investors.
Pfizer has a history of big acquisitions, such as its $68bn takeover of Wyeth in 2009 and its $56bn deal with Pharmacia in 2002.
The company had recently appeared more focused on divesting non-core operations and restructuring but Ian Read, chief executive, said last year he would “never say never to a large acquisition that made sense”.
An acquisition of AstraZeneca would provide an outlet for the tens of billions of dollars in cash that Pfizer has accumulated overseas – avoiding the hefty tax bill that would be involved in repatriating it to the US.
However, the foreign acquisition of one of Britain’s biggest and most prized companies would be sure to rekindle debate over the openness of UK takeover rules and spark concern over jobs and investment in the life sciences sector.
Ann McKechin, a Labour MP on the parliamentary committee for business, innovation and skills, said: “Much depends on the detail of any deal but it is important that long-term strategic policy is uppermost rather than short-term gain for some groups of shareholders”.
AstraZeneca, led by Pascal Soriot, who took over as chief executive in 2012, has been struggling with declining sales and profits resulting from the loss of patent protection of several of its most lucrative drugs.
However, its shares have climbed more than 20 per cent in the past six months amid rising optimism over a range of treatments in development for cancer and autoimmune diseases, such as diabetes.
Mr Baum said acquisition of AstraZeneca would transform Pfizer’s “competitive presence along the critical axis of immuno-oncology [and] autoimmune disease”.