Pfizer Said to Plan Raising AstraZeneca Bid for Second Time (1)
2014-05-13 00:52:21.616 GMT
(Updates with tax benefit in seventh paragraph.)
By David Welch, Albertina Torsoli and Manuel Baigorri
May 13 (Bloomberg) -- Pfizer Inc. is planning to sweeten
its bid for U.K. rival AstraZeneca Plc for a second time, people
with knowledge of the matter said.
Pfizer and its advisers are crafting a new offer that would
increase the value modestly above the current 50 pounds-a-share
(about $84) level while bumping the cash portion, said two of
the people, who asked not to be identified discussing private
information. Pfizer will probably wait until after U.K.
government hearings to raise its bid, they said.
Pfizer is putting together a sweetened offer before it
considers whether to make a hostile takeover attempt by bringing
its proposal directly to AstraZeneca’s shareholders, the people
said. Pfizer would prefer a friendly deal since its unsolicited
overture already has attracted political scrutiny in the U.S.
and U.K. AstraZeneca rejected Pfizer’s second proposal on May 2,
valued at 62.6 billion pounds ($106 billion) and made up of 32
percent cash and the rest in stock.
Ian Read, Pfizer’s chief executive officer, and Pascal
Soriot, his counterpart at AstraZeneca, will testify at two
separate parliamentary committees this week, as the U.K.
government seeks guarantees that Pfizer will preserve jobs and
medical research in Britain.
Pfizer is concerned it’s beginning to lose momentum on the
deal, said two of the people, and will be talking further to
investors and listening to what comes out of the hearings as it
evaluates its next steps.
Representatives for Pfizer and AstraZeneca declined to
comment.
Tax Rates
Pfizer has said it would move its legal residence to the
U.K., gaining a lower tax rate, while the company’s operational
headquarters would remain in New York. In doing so, Pfizer would
join more than a dozen other companies that have said they are
making or considering such transactions since 2012.
Read has said the tax benefits, the chance to avoid U.S.
taxes on $70 billion in cash built up overseas and AstraZeneca’s
promising cancer medicines are among the reasons Pfizer is
pursuing the deal.
The tax issue has sparked criticism from U.S. lawmakers,
including Senator Ron Wyden, an Oregon Democrat and chairman of
the Senate Finance Committee that oversees tax legislation.
Wyden said he may take up a proposal that would make it harder
for U.S. companies to shift their legal addresses to avoid
taxes.
Cancer Drug
A deal with AstraZeneca would help Pfizer add early-stage
drugs that use the body’s own immune cells to recognize and
attack tumors. Atop the list is MEDI4736, AstraZeneca’s immuno-
oncology drug expected to compete with experimental therapies
from drugmakers including Bristol-Myers Squibb Co., Merck & Co.
and Roche Holding AG.
British lawmakers earlier this month mobilized against
Pfizer’s attempt, demanding Business Secretary Vince Cable
secure assurances on jobs and research investment. Part of
Pfizer’s pitch to British officials is that AstraZeneca is a
global company and has substantial operations and people outside
the country, said one of the people.
About 40 percent of AstraZeneca’s revenue in 2013 came from
North America, and more than 30 percent from outside of Europe,
data compiled by Bloomberg show.
AstraZeneca Chairman Leif Johansson said the drugmaker will
return to growth as an independent company and listed the
reasons for rejecting the Pfizer offer in a video this month.
Among them: The bid “significantly undervalued” the company,
he said.
Job Assurances
Pfizer has pledged to keep at least one-fifth of the
combined companies’ research and development workers and
substantial manufacturing plants in the U.K. for at least five
years after a deal.
In the U.S., the governors of Maryland and Delaware have
asked for similar assurances, raising concerns that Pfizer would
reduce about 5,700 AstraZeneca jobs in their states as part of a
cost-cutting effort after the acquisition. Read wrote the
governor’s yesterday saying it was too soon in the effort to
gain AstraZeneca to discuss potential effects on jobs.
An acquisition of AstraZeneca would add to the $127 billion
of mergers among pharmaceutical companies this year, according
to data compiled by Bloomberg. An industrywide recalibration
that has been building since 2011 reached a peak last month with
a flurry of activity by GlaxoSmithKline Plc, Novartis AG and
Valeant Pharmaceuticals International Inc.
For Related News and Information:
AstraZeneca Pipeline Is Lottery Ticket in Pfizer’s Pursuit
NSN N5GYUY6S972K <GO>
Pfizer-AstraZeneca Deal May Harm Search for New Medicines
NSN N4Y3MD6JTSEL <GO>
Pfizer’s Bid May Have Been Invited by U.K.’s Tax Policy
NSN N4R75Q6KLVS1 <GO>
Top health stories:TOP HEA <GO>
Bloomberg Industries Research: BI PHRM <GO>
--With assistance from Naomi Kresge in Berlin, Drew Armstrong in
New York and Michelle Fay Cortez in Minneapolis.
To contact the reporters on this story:
David Welch in New York at +1-212-617-2788 or
dwelch12@bloomberg.net;
Albertina Torsoli in Geneva at +41-22-317-9202 or
atorsoli@bloomberg.net;
Manuel Baigorri in London at +44-20-3525-4457 or
mbaigorri@bloomberg.net
To contact the editors responsible for this story:
Mohammed Hadi at +1-212-617-2914 or
mhadi1@bloomberg.net
Elizabeth Wollman, Andrew Pollack
2014-05-13 00:52:21.616 GMT
(Updates with tax benefit in seventh paragraph.)
By David Welch, Albertina Torsoli and Manuel Baigorri
May 13 (Bloomberg) -- Pfizer Inc. is planning to sweeten
its bid for U.K. rival AstraZeneca Plc for a second time, people
with knowledge of the matter said.
Pfizer and its advisers are crafting a new offer that would
increase the value modestly above the current 50 pounds-a-share
(about $84) level while bumping the cash portion, said two of
the people, who asked not to be identified discussing private
information. Pfizer will probably wait until after U.K.
government hearings to raise its bid, they said.
Pfizer is putting together a sweetened offer before it
considers whether to make a hostile takeover attempt by bringing
its proposal directly to AstraZeneca’s shareholders, the people
said. Pfizer would prefer a friendly deal since its unsolicited
overture already has attracted political scrutiny in the U.S.
and U.K. AstraZeneca rejected Pfizer’s second proposal on May 2,
valued at 62.6 billion pounds ($106 billion) and made up of 32
percent cash and the rest in stock.
Ian Read, Pfizer’s chief executive officer, and Pascal
Soriot, his counterpart at AstraZeneca, will testify at two
separate parliamentary committees this week, as the U.K.
government seeks guarantees that Pfizer will preserve jobs and
medical research in Britain.
Pfizer is concerned it’s beginning to lose momentum on the
deal, said two of the people, and will be talking further to
investors and listening to what comes out of the hearings as it
evaluates its next steps.
Representatives for Pfizer and AstraZeneca declined to
comment.
Tax Rates
Pfizer has said it would move its legal residence to the
U.K., gaining a lower tax rate, while the company’s operational
headquarters would remain in New York. In doing so, Pfizer would
join more than a dozen other companies that have said they are
making or considering such transactions since 2012.
Read has said the tax benefits, the chance to avoid U.S.
taxes on $70 billion in cash built up overseas and AstraZeneca’s
promising cancer medicines are among the reasons Pfizer is
pursuing the deal.
The tax issue has sparked criticism from U.S. lawmakers,
including Senator Ron Wyden, an Oregon Democrat and chairman of
the Senate Finance Committee that oversees tax legislation.
Wyden said he may take up a proposal that would make it harder
for U.S. companies to shift their legal addresses to avoid
taxes.
Cancer Drug
A deal with AstraZeneca would help Pfizer add early-stage
drugs that use the body’s own immune cells to recognize and
attack tumors. Atop the list is MEDI4736, AstraZeneca’s immuno-
oncology drug expected to compete with experimental therapies
from drugmakers including Bristol-Myers Squibb Co., Merck & Co.
and Roche Holding AG.
British lawmakers earlier this month mobilized against
Pfizer’s attempt, demanding Business Secretary Vince Cable
secure assurances on jobs and research investment. Part of
Pfizer’s pitch to British officials is that AstraZeneca is a
global company and has substantial operations and people outside
the country, said one of the people.
About 40 percent of AstraZeneca’s revenue in 2013 came from
North America, and more than 30 percent from outside of Europe,
data compiled by Bloomberg show.
AstraZeneca Chairman Leif Johansson said the drugmaker will
return to growth as an independent company and listed the
reasons for rejecting the Pfizer offer in a video this month.
Among them: The bid “significantly undervalued” the company,
he said.
Job Assurances
Pfizer has pledged to keep at least one-fifth of the
combined companies’ research and development workers and
substantial manufacturing plants in the U.K. for at least five
years after a deal.
In the U.S., the governors of Maryland and Delaware have
asked for similar assurances, raising concerns that Pfizer would
reduce about 5,700 AstraZeneca jobs in their states as part of a
cost-cutting effort after the acquisition. Read wrote the
governor’s yesterday saying it was too soon in the effort to
gain AstraZeneca to discuss potential effects on jobs.
An acquisition of AstraZeneca would add to the $127 billion
of mergers among pharmaceutical companies this year, according
to data compiled by Bloomberg. An industrywide recalibration
that has been building since 2011 reached a peak last month with
a flurry of activity by GlaxoSmithKline Plc, Novartis AG and
Valeant Pharmaceuticals International Inc.
For Related News and Information:
AstraZeneca Pipeline Is Lottery Ticket in Pfizer’s Pursuit
NSN N5GYUY6S972K <GO>
Pfizer-AstraZeneca Deal May Harm Search for New Medicines
NSN N4Y3MD6JTSEL <GO>
Pfizer’s Bid May Have Been Invited by U.K.’s Tax Policy
NSN N4R75Q6KLVS1 <GO>
Top health stories:TOP HEA <GO>
Bloomberg Industries Research: BI PHRM <GO>
--With assistance from Naomi Kresge in Berlin, Drew Armstrong in
New York and Michelle Fay Cortez in Minneapolis.
To contact the reporters on this story:
David Welch in New York at +1-212-617-2788 or
dwelch12@bloomberg.net;
Albertina Torsoli in Geneva at +41-22-317-9202 or
atorsoli@bloomberg.net;
Manuel Baigorri in London at +44-20-3525-4457 or
mbaigorri@bloomberg.net
To contact the editors responsible for this story:
Mohammed Hadi at +1-212-617-2914 or
mhadi1@bloomberg.net
Elizabeth Wollman, Andrew Pollack