Pfizer engages AstraZeneca with raised $106 billion offer

  • Reuters, London
  • Updated: May 02, 2014 14:31 IST

US drugmaker Pfizer Inc has raised its offer for AstraZeneca Plc to 63 billion pounds ($106 billion), it said on Friday, adding that the British drugmaker was reviewing the proposal.

Pfizer's pursuit of AstraZeneca to create the world's biggest pharmaceuticals company - and cut its tax bill - comes amid a wave of deal-making in the healthcare sector.

The 50 pounds ($84.47) a share indicative offer follows AstraZeneca's decision to rebuff an earlier proposal valuing it at 58.8 billion pounds, or 46.61 pounds per share.

"Given where the shares have come from, this doesn't look unreasonable," said one fund manager whose institution is among the top 10 investors in AstraZeneca.

AstraZeneca shares were trading at around 30 pounds a year ago, but confidence in the company's cancer drug pipeline has built up strongly since then.

"Anything with a five in front is more likely to work than anything with a four in front, just from a sentiment point of view," said analyst Stephen McGarry at Societe Generale.

Investors had previously said they were looking for at least 50 pounds a share and also wanted more cash in the mix.

The latest deal would offer 32 percent cash and 68 percent shares, little different from the 30-70 split offered originally.

AstraZeneca said its board would meet to discuss the Pfizer proposal and a further announcement would be made "when appropriate".

Cost savings

Shares in the British group were barely changed at 48.17 pounds by 0715 GMT. The stock has already gained ground in late trading on Thursday on speculation that Pfizer would come back with an improved offer.

Buying AstraZeneca would boost Pfizer's pipeline of cancer drugs and create significant cost and tax savings.

But the takeover, which would be the largest acquisition of British company by a foreign business, has stirred political controversy in Britain.

In an attempt to smooth relations with the government, Pfizer Chief Executive Ian Read wrote to Prime Minister David Cameron, promising to complete a substantial new research centre planned by AstraZeneca in Cambridge and retain a manufacturing plant in Macclesfield.

The Cambridge site, in particular, is viewed as important to the development of the so-called "golden triangle" of Britain's life sciences industry, spanning Oxford, Cambridge and London.

Read also said that 20 percent of the enlarged group's research and development workforce would be in Britain.

"We make these commitments for a minimum of five years, recognising our ability, consistent with our fiduciary duties, to adjust these obligations should circumstances significantly change," Read added in a letter to Cameron.

Pfizer said its proposal would see shareholders receiving, for each AstraZeneca share, 1.845 shares in the combined company and 15.98 pounds in cash.

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