US DRUGMAKER Pfizer increased its offer for AstraZeneca to £63bn yesterday, but the British company promptly rejected the proposal, which would create the world’s biggest pharmaceuticals company.
AstraZeneca’s board said the offer undervalued the company “substantially” and was not an adequate basis on which to engage with its suitor.
Industry analysts and investors said that raised the possibility that Pfizer would now take the takeover plan, which would boost its pipeline of cancer drugs and create significant tax and cost savings, direct to AstraZeneca shareholders.
The US group would much prefer an agreed deal, since hostile takeovers typically take longer, require a higher final price and carry more risks because the bidder cannot access the target’s books to assess its business.
One AstraZeneca investor said Pfizer management had made clear in meetings this week that it wanted a friendly deal but it was determined to the see the transaction completed and a hostile bid was a potential “tool”.
While Pfizer has given assurances to the Government on retaining drug research in Britain, a spokesman for Prime Minister David Cameron said AstraZeneca’s fate would be determined by shareholders, not the state.
Friday’s £50 a share indicative offer followed AstraZeneca’s decision to rebuff an earlier proposal that valued it at £58.8bn, or £46.61 per share.
Some investors and analysts had expected that the sweetened offer would be enough to bring AstraZeneca’s board to the negotiating table, even if it was not accepted, and the swift rejection suggests Pfizer may now go over the board’s head.
“I think it’s making it increasingly likely that Pfizer is going to come back with a hostile bid,” said Mick Cooper, analyst at Edison Investment Research.
Leading investors have met with Pfizer chief executive Ian Read this week in London and some feel that an offer of £50 or above is certainly worth discussing. AstraZeneca shares were trading at around £30 a year ago, but confidence in the company’s cancer drug pipeline has built up strongly since then.
The takeover plan would be the largest acquisition of a British company by a foreign business.