2nd May 2014 10:07
LONDON (Alliance News) - AstraZeneca PLC Friday rejected Pfizer Inc's second bid for the company, saying that despite Pfizer raising its bid to GBP50 per share it still "significantly undervalue[s]" the company and that the details of the proposal are "inadequate."
AstraZeneca advised shareholders to take no action.
"Pfizer's proposal would dramatically dilute AstraZeneca shareholders' exposure to our unique pipeline and would create risks around its delivery. As such, the Board has no hesitation in rejecting the Proposal," said Chairman Leif Johansson in a statement.
AstraZeneca noted that it was continuing to show strong momentum as an independent company, and that it was continuing to invest "significantly" in research, development and manufacturing in the UK, Sweden and the US.
Ahead of the market open Friday Pfizer increased its bid for AstraZeneca, submitting a revised proposal to combine the two firms and offered a bid that valued the UK pharmaceutical giant at approximately GBP64 billion.
The firm's latest proposal offered AstraZeneca a combined value of GBP50 per share, through which shareholders would have received 1.845 shares in the combined company and 1,598 pence in cash for each AstraZeneca share.
Pfizer said the new offer represented a 39% premium to the closing price of GBP35.86 on January 3, 2014, the trading day immediately prior to the date of Pfizer's initial approach at the beginning of the year.
Under the terms of the deal, Pfizer said the two firms would have been combined under a new UK incorporated holding company, with Pfizer and AstraZeneca shareholders owning approximately 73% and 27%, respectively, of the new parent company.
The proposal gave an indicative value of USD84.47 per AstraZeneca share, based on Pfizer's closing share price of USD31.15 on May 1, 2014, the company said.
"The consistent message we have heard reinforces our belief that there is a highly compelling strategic, business and financial rationale for combining our businesses, with significant benefits for shareholders and stakeholders of both companies. We believe our proposal is responsive to the views of AstraZeneca shareholders and provides a sound basis upon which to arrive at recommendable terms for the combination of our two companies," said Pfizer's Chairman and CEO Ian Read.
In a separate announcement early Friday, Pfizer released a letter the Pfizer CEO has sent to the UK Prime Minister David Cameron, detailing the company's commitment to the UK and its life sciences agenda following the revised proposal made to AstraZeneca.
"We would like to assure the Government of our long term commitment to the UK where Pfizer already employs a significant number of colleagues across Research, Commercial, and Administrative roles," said the letter.
Pfizer stated that it is committed to establishing the combined company's corporate and tax residence in England; completing the construction of AstraZeneca's currently planned Cambridge campus; integrate the operations of the combined company so as to employ a minimum of 20% of the combined company's total research and development workforce in the UK going forward; locate manufacturing operations of the combined company in the UK and retain substantial commercial manufacturing facilities in Macclesfield; base the combined company's European business headquarters in the UK; invite at least two AstraZeneca board members to join the board of the new company; and to hold board meetings in the UK.
"The UK Government's efforts to maintain incentives for investment is an important factor to enable success. We make these commitments for a minimum of five years, recognizing our ability, consistent with our fiduciary duties, to adjust these obligations should circumstances significantly change," Read concluded, calling a partnership with the UK government a "critical part of this potential transaction."
Pfizer first approached AstraZeneca with an offer that valued its shares at GBP46.61, or USD76.62, each on January 5. However, AstraZeneca rejected that bid as it had undervalued the company, and it had concerns about the structure of the proposed takeover as a large proportion of the consideration was made up of Pfizer shares. It was also concerned about the risks of the proposed structure of the enlarged company as Pfizer would re-domicile to the UK for tax purposes.
Shares in AstraZeneca were trading down 0.30% at 4,800.50 pence Friday morning.
By Alice Attwood; [email protected]; @AliceAtAlliance, additional reporting by Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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