AstraZeneca value plunges £18bn as it rejects 'final offer'
Pharma firm AstraZeneca has apparently scuppered a protracted takeover attempt by US drugs giant Pfizer as it rejected an improved final offer of £69bn as inadequate.
The UK-based firm said the Viagra maker's proposal on Sunday night undervalued it by £5bn and claimed it was motivated by tax saving and cost-cutting plans.
Astra shares plunged by as much as 15% as the prospect of a deal faded yet chairman Leif Johansson admitted he had "no idea" whether the saga was over.
Some investors have said that Pfizer's offer was a "good price", while other analysts have suggested that the American firm could come back with a fresh approach in six months.
Astra'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 mega-merger.
But the FTSE 100 company for the first time revealed a price at which it might be prepared to consider a deal – subject to other key concerns being addressed.
AstraZeneca's rejection came after a "fourth and final" proposal from Pfizer as a deadline for making a firm offer by yesterday afternoon loomed.
It insisted that the terms undervalued the company and its "exciting prospects", 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 controversial plans to re-domicile a newly-merged 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 of AstraZeneca appears to have been fundamentally driven by the corporate financial benefits to its shareholders of cost savings and tax minimisation."
He said that from the time of initial talks in January, the US company had "failed to make a compelling strategic, business or value case".
It came after a weekend of talks involving senior executives after 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 Scottish-born chief executive Ian Read urged the Astra board to engage in "meaningful dialogue", saying the offer represented "compelling and full value" and adding: "The time for constructive engagement is running out."
But Astra indicated it would not consider anything less than 10% 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".
In addition, Astra said integration would risk "significant disruption" to the delivery of its new drugs – echoing chief executive Pascal Soriot's claim before MPs that life-saving medicines could be delayed.
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.