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AstraZeneca rejects final proposal from Pfizer

Published: 18:39 19 May 2014 AEST

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The board of AstraZeneca (LON:AZN) has rejected Pfizer’s final proposal for a combination of the two companies.

US drugs giant Pfizer has asked the board of Astra for recommendation of a proposed bid comprising £24.76 in cash and 1.747 Pfizer shares per AstraZeneca share, representing a value of £55.00 per AstraZeneca share (based on the closing price of Pfizer shares on 16 May 2014).

Astra’s response is that the terms undervalue the company and “its attractive prospects”.

"Pascal Soriot, Marc Dunoyer and I had a lengthy discussion with Pfizer over the weekend about the proposal Pfizer made on Friday evening at a value of £53.50 per share,” revealed Leif Johansson, chairman of Astra.

“During this discussion, Pfizer said that it could consider only minor improvements in the financial terms of the Friday proposal. In response, we indicated, even assuming that other key aspects of any proposal had been satisfactory, that the price at which the board of AstraZeneca would be prepared to provide a recommendation would have to be more than 10% above the level contained in Pfizer's Friday proposal,” he added.

As Pfizer has indicated its proposal is a final one then, under UK takeover law, it cannot increase the offer unless a rival bidder enters the fray. It has also indicated that it would only make a bid with the backing of the Astra board and so the rejection of the offer appears to put the kybosh on Pfizer’s plans to take over its Anglo-Swedish rival.

Even so, Johansson had what maybe a final dig at Pfizer, saying Pfizer's approach throughout its pursuit of AstraZeneca “appears to have been fundamentally driven by the corporate financial benefits to its shareholders of cost savings and tax minimisation”.

“From our first meeting in January to our latest discussion yesterday, and in the numerous phone calls in between, Pfizer has failed to make a compelling strategic, business or value case. The board is firm in its conviction as to the appropriate terms to recommend to shareholders," Johansson said.

The market appears to have taken the view that it is time to move on and there is nothing to see here, as the share price of Astra has tumbled 12.4% to 4,228p.

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