Pfizer admits AstraZeneca defeat
pharmafile | May 27, 2014 | News story | Manufacturing and Production, Research and Development, Sales and Marketing | AZ, AstraZeneca, Pfizer, Read, buyout, merger
Pfizer has acknowledged that it will not make an offer for AstraZeneca following the firms’ failure to agree a price in a deal which would have created the world’s largest pharma company.
The US group’s admission brings to an end one of the most politically controversial episodes in pharma of recent times – although Pfizer could make a new bid in six months’ time under British M&A rules.
Pfizer’s bids have been opposed by scientists worried about the potential erosion of the UK’s research base, and executives from both companies have been questioned by politicians.
Chief among their worries were that Pfizer wanted an HQ in New York with a tax base in Britain, where lower corporate tax rates could save the combined company $800 million a year.
Pfizer made what it said was its final proposal – rejected by AstraZeneca – on 18 May and has now formally indicated that it will not add to it.
“We continue to believe that our final proposal was compelling and represented full value for AstraZeneca based on the information that was available to us,” said Pfizer chief executive and chairman Ian Read.
“As we said from the start, the pursuit of this transaction was a potential enhancement to our existing strategy,” he went on. “We will continue our focus on the execution of our plans, bringing forth new treatments to meet patients’ needs and remaining responsible stewards of our shareholders’ capital.”
The proposed AstraZeneca bid would have seen Pfizer pay £69 billion ($118 billion), with an offer upped to £55 per share, with an increase in the cash component as a proportion of the total consideration from 33% to around 45 per cent.
This represented a 15% premium over the value of a cash-and-share approach made on 2 May, which was worth £50 per share at the time.
AstraZeneca’s chairman Leif Johansson slammed both the ‘inadequate price’ and the ‘lack of industrial logic’ behind Pfizer’s move.
“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 minimization,” Johansson said.
“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.”
Pfizer pledged to retain 20% of the two companies’ R&D workforce in the UK for at least five years – but the US company’s commitment to the UK was questioned by detractors.
Feelings have been running high: a former boss of AstraZeneca went so far as to say Pfizer would ‘suck the lifeblood’ out of his old firm.
Adam Hill
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