28th Apr 2014 10:15
LONDON (Alliance News) - Pharmaceutical giant AstraZeneca PLC Monday advised its shareholders to take no action, after US peer Pfizer Inc confirmed it had approached the British company twice about potential takeover talks and is considering its options after being rebuffed both times.
In a statement, Pfizer said it first approached AstraZeneca with a cash and shares offer that valued the British company's shares at GBP46.61, or USD76.62, each on January 5. It said discussions about the approach were limited and ended on January 14.
The US company then contacted AstraZeneca again on Saturday in the hope the sides could come up with a takeover proposal that both companies would put to their shareholders, but AstraZeneca again declined to engage with Pfizer, the US company said.
"As in its previous proposal, Pfizer is considering a possible transaction in which AstraZeneca shareholders would receive a significant premium for their AstraZeneca shares, to be paid in a combination of cash and shares in the combined entity," Pfizer said.
It said it would be offering a "significant" premium to AstraZeneca's share price on April 17 and a substantial cash payment if it does go ahead with an offer. AstraZeneca's shares closed at 3,779 pence that day, and were trading up 15% at 4,678.86 pence Monday morning, the biggest gainer on the FTSE 100.
"AstraZeneca shareholders would become significant shareholders in the combined company and participate in significant value creation opportunities, including benefiting from the potential growth opportunities and operational and financial synergies that the combination of two complementary global pharmaceutical companies would be expected to generate," it added.
Pfizer said it hopes a deal can still be done, and it if does come off, then the two companies would be combined under a new UK-incorporated holding company listed on the New York Stock Exchange.
AstraZeneca strongly advised shareholders to "take no action" on the Pfizer approach in a separate statement Monday.
The company confirmed that it had decided not to enter talks with Pfizer, and said that it considered the offer made by Pfizer in January had "significantly undervalued" its business and prospects. It said it hadn't entered talks this weekend because there was no specific, attractive proposal from Pfizer.
AstraZeneca was also concerned about the structure of the initial 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.
The British company expressed confidence in its own strategy, and noted that its first quarter results had showed the progress it had made towards returning to growth.
Last week, AstraZeneca maintained its guidance for 2014, as it saw pretax profit drop in the first quarter, hit by write downs on the sale of its Alderley Park site and its acquisition of Bristol-Myers Squibb Co's share of their diabetes alliance. Its revenues rose in the quarter.
AstraZeneca has had a tough couple of years as some of its key blockbuster drugs came off patent and revenues slid due to competition from generics. It has been re-focusing on key areas where it hopes it can grow, like treatments for diabetes.
Liberum Capital said that a bid at Pfizer's implied offer price of GBP49.15 in "unlikely" as "AstraZeneca will be unwilling to accept that price and Pfizer will not want to go hostile". An increased offer closer to GBP60.00 would "offer good value for AstraZeneca shareholders," Liberum analyst Naresh Chouhan said, as he reiterated the brokerage's Buy rating for AstraZeneca.
By Steve McGrath and Hana Stewart-Smith; [email protected]; @SteveMcGrath1
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