AstraZeneca appeared to bring an end to a protracted takeover attempt by US drug giant Pfizer yesterday as it rejected a final offer of £69 billion.
The UK firm said the proposal undervalued it by £5bn and the move was motivated by tax-saving and cost-cutting plans.
AstraZeneca shares plunged by up to 15 per cent as the prospect of a deal faded, yet chairman Leif Johansson admitted he had “no idea” whether the saga was over.
One leading investor said Pfizer’s offer was a “good price” though it could do better, while an analyst suggested the American firm could come back with a fresh approach in six months.
AstraZeneca’s statement echoed fears expressed by critics that a deal would hit jobs and damage the UK’s science base, and they urged the board to continue to stand firm against the merger. But the FTSE 100 company for the first time revealed a price at which it might be prepared to consider a deal.
Prime Minister David Cameron said: “The government quite rightly should be neutral in this. What we should do is always be engaged with both companies, as we have been, to try and make sure whatever the outcome, British science, British jobs, British manufacturing, that they get a proper and deserved attention.”
Shadow business secretary Chuka Umunna said: “Labour and others have been clear from the outset that if this potential takeover is found not to be in the best interests of British science, jobs and industry, it should not proceed.”
AstraZeneca’s rejection came after a “fourth and final” proposal from Pfizer on Sunday night. It insisted that the terms undervalued the company, though a fall in shares in the wake of the announcement left its market value nearly £18bn lower than what Pfizer was prepared to pay.
Astra said the deal would bring “uncertainty and risk,” also highlighting plans to re-domicile the company in the UK for tax purposes, and the fact that the takeover offer was mainly comprised of shares.
Mr Johansson said: “Pfizer’s approach throughout its pursuit… appears to have been fundamentally driven by the corporate financial benefits to its shareholders of cost savings and tax minimisation.”
Pfizer upped its offer from a previous £50 a share to £53.50 on Friday, before raising this again to £55 on Sunday evening.
The US giant’s chief executive, Ian Read, urged the Astra board to engage in “meaningful dialogue,” saying the offer represented “compelling and full value”. But Astra indicated it would not consider anything less than 10 per cent above the £53.50 offer, or £58.85, valuing it at £74.3bn, and that the £55 proposal represented only a “minor improvement”.
It also outlined four key points underlying its rejection of the deal, starting with planned cost-cutting which would “imply a meaningful reduction in research and development potential and capabilities”. Astra said integration would risk “significant disruption” to the delivery of its new drugs. The UK firm pointed as well to Pfizer’s past record, saying its previous large-scale takeovers had “highlighted the challenges around the negative impact of integration on research and development productivity and output”. Finally, Astra expressed concerns about the impact of plans by the US firm to separate out its operations into three business units.