Pfizer Inc. (NYSE:PFE) inched down in morning trades after U.K's AstraZeneca plc (NYSE:AZN) turned down an improved takeover offer from the biggest U.S. drugmaker worth more than $106 billion.
Pfizer was down 0.5 percent at $31.00 at 9:31 a.m. in New York. American depositary receipts of AstraZeneca were down 0.3 percent at $80.88.
The London-based company said the financial and other terms described in the U.S. group's latest proposal were inadequate and not a basis on which to engage in talks.
"The large proportion of the consideration payable in Pfizer shares and the tax-driven inversion structure remain unchanged. Accordingly, the board has rejected the Proposal," AstraZeneca said in a statement today.
The rejection came hours after New York-based Pfizer announced a fresh bid of £50.00 ($84.47) per share, valuing the U.K.'s second-biggest drug maker at $106.43 billion.
The revised bid represents a premium of about 7 percent over Pfizer's previous offer, made back in January, and increases the cash component of the bid to about 32 percent from 30 percent previously. Under the revised offer, AstraZeneca shareholders would get 1.845 shares in the combined company and £15.98 in cash.
A deal on that scale would represent the biggest foreign takeover of a British company, and would also likely be the second biggest pharmaceutical deal after Pfizer's $112 billion purchase of Warner Lambert in 2000.
In addition to an expanded drug portfolio--particularly in cancer treatments--a deal would provide a use for some of the billions in profits Pfizer holds overseas. Bringing the cash home to the U.S. would likely result in a higher tax bill.
Pfizer had proposed incorporating the merged company in Britain, but keeping the headquarters and primary stock market listing in New York.
The complicated tax arrangements, and large stock element of the deal -- Pfizer was only offering £15.98 per share in cash -- worried AstraZeneca's board.
Pfizer will now have to decide whether to improve its offer further, or make a hostile bid.