Pfizer is considering its acquisition options as a potential path opens this week for the US drugmaker to renew its pursuit of AstraZeneca.
Tuesday marks three months since the collapse of Pfizer’s £69.4bn takeover approach for Britain’s second-biggest
From that point onwards AstraZeneca would be allowed under UK Takeover Panel rules to invite Pfizer back to the negotiating table, or the US company would be permitted to make one fresh take-it-or-leave-it offer in private.
Pfizer is barred under those rules from talking publicly about any renewed interest in AstraZeneca but Ian Read, chief executive, has said he is continuing to look “aggressively” at potential acquisitions.
Speculation about a possible new bid has lifted AstraZeneca’s shares by 7.5 per cent in the past week to £44.18 but they remain well below the £55 per share cash and stock Pfizer offer that was rejected in May.
Analysts and bankers rate the chances of an immediate resumption of talks as low because AstraZeneca appears as committed as ever to its go-it-alone strategy – talking up the prospects of its drug pipeline and highlighting the risks of a disruptive merger.
Several big AstraZeneca shareholders made clear in May that they would have favoured more talks with Pfizer but there has been no sign of a concerted campaign to force the board back to the table.
Aside from the private one-shot offer allowed after Tuesday, Pfizer cannot take any further steps without an invitation from AstraZeneca to engage.
Only in November, when the full six-month cooling-off period expires, would Pfizer be allowed to make a fresh approach in public.
Analysts say AstraZeneca remains an attractive target for Pfizer, which is looking for acquisitions to replenish its pipeline and to absorb some of the tens of billions of dollars of cash it has trapped offshore.
However, any new bid would face political risks on both sides of the Atlantic.
A Pfizer takeover of AstraZeneca would be by far the biggest of the so-called “tax inversions” by US companies that are facing increasing opposition in Washington.
By acquiring AstraZeneca and shifting its official home to the UK, Pfizer would shelter its overseas revenues from the 35 per cent US corporate tax rate.
US President Barack Obama has branded companies attempting such deals as “corporate deserters” and threatened executive action to stop them, while Democrats on Capitol Hill are working on legislation to halt the practice.
The decision this month by Walgreens, the US pharmacy chain, to pass up an opportunity to move its tax home to Switzerland as part of a deal with Alliance Boots has been seen as a sign that political pressure is starting to deter inversions.
Some bankers and analysts believe Walgreens was especially sensitive to the controversy because it is a consumer-facing business and say that Pfizer is less likely to be discouraged by rhetoric alone.
These people predict that Pfizer would prefer to delay any fresh inversion attempt until after the US midterm elections in November to avoid making itself a campaign issue. However, the longer Pfizer delays, the greater the political risks would be in the UK as parties gear up for next May’s general election.
Pfizer’s initial approach last spring sparked calls from the opposition Labour party for any deal to be subjected to a public interest test, with the prospect of government intervention if it were found to threaten the UK science base. This debate would be amplified further in the run-up to polling.
Valuation could also remain an obstacle given the impasse last May between Pfizer’s £55-per-share final offer and AstraZeneca’s demand for at least £58.50 before it would consider a deal.