Pfizer scrambles to keep Astra bid alive
CAMBRIDGE, CAMBRIDGESHIRE - MAY 07: Packets of prescription drugs made by the pharmaceutical firms AstraZeneca and Pfizer on May 7, 2014 in Cambridge, England. The proposed takeover by American pharmaceutical giant Pfizer of its British rival AstraZeneca has led to the UK Business Secretary Vince Cable addressing Parliament to affirm the government's commitment to securing British science jobs. (Photo by Oli Scarff/Getty Images)©Getty
Pfizer is scrambling to keep alive its £69.4bn offer for AstraZeneca as the two sides vie for shareholder support in the battle to control the UK drugmaker.
AstraZeneca sought to bring a definitive end to Pfizer’s pursuit by issuing a statement saying there was no chance of renewed talks leading to an increased bid after it rejected the US company’s £55-per-share “final” offer on Monday.
But Pfizer continued to press its target to return to the table, saying: “The fate of the deal is now up to AstraZeneca’s shareholders. We believe our final proposal represents compelling and full value for AstraZeneca shareholders.”
Since AstraZeneca’s rejection the two companies have sought to blame each other for the way the bid process has been handled, and feuded over the correct interpretation of UK takeover rules.
Big investors staked out opposing positions in the dispute as the two companies lobbied for backing with just four days remaining before a May 26 deadline for Pfizer to lodge a firm bid or walk away.
Schroders, which owns 2.1 per cent of AstraZeneca, said it was disappointed with the “quick rejection” of an offer that represented a 45 per cent premium over the share price before news of Pfizer’s interest was first reported last month.
“We would encourage the AstraZeneca management to recommence their engagement with Pfizer,” the fund manager said.
But the chief investment officer of Fidelity, which owns 1.4 per cent, said AstraZeneca’s board “did the right thing” by rejecting the offer. “I don’t think that Pfizer was a suitable partner. It was motivated by tax and finance considerations,” said Dominic Ross.
The companies earlier traded rival statements on the situation, with Pfizer’s appearing to leave open the possibility of a higher offer while AstraZeneca’s ruled this out.
Under UK takeover rules, Pfizer is not allowed to increase its offer or launch a hostile bid because it declared its £55 proposal final and said it would proceed only if the bid was recommended by AstraZeneca’s board. However, in its statement late on Monday, Pfizer “reserved the right subsequently to increase its offer at any time”.
Some shareholders took this to mean that the two companies could agree a recommended £55-per-share deal as a first step towards a higher price. The May 26 deadline could be extended at AstraZeneca’s request, if it agreed to resume negotiations.
People close to AstraZeneca say the UK company saw Pfizer’s statement as an attempt to sow confusion and foment rebellion against its board.
AstraZeneca issued its own statement, saying: “Pfizer’s final proposal, which the board rejected, is not capable under the Takeover Panel rules of being increased or even suggested at being increased, privately or publicly.”
One of the principles of the Takeover Code is that parties are held to what they publicly say, in order to protect investors who may have bought or sold based on company statements. Under its rules, Pfizer would be barred from approaching AstraZeneca for six months if a deal or extension is not agreed by Monday.
However, AstraZeneca could reopen talks after three months and one big shareholder said on Tuesday it would push the company to take up that option.
Other big shareholders to have voiced support for AstraZeneca’s go-it-alone stance include Investor of Sweden, which owns 4 per cent, and M&G, a top 30 investor. Jupiter and Schafer Cullen Capital Management have joined Schroders in criticising the board.
Besides Investor, AstraZeneca’s other top 10 shareholders have so far remained silent, at least in public. One told the Financial Times that the board had made “a gross miscalculation” but declined to be named.
AstraZeneca’s top 10 shareholders include BlackRock, which with a 7.8 per cent stake is the largest; Axa, which has a 5.5 per cent stake, the second-largest; Vanguard, which holds 4.7 per cent; and Invesco, with 3.6 per cent.
AstraZeneca has argued it can deliver more value in the long term as an independent company, pointing to its rich pipeline of new drugs in development for cancer, asthma and diabetes.