The takeover bid of £85 billion from Pfizer has been rejected by AstraZeneca on the grounds that it undervalued the UK Company and also that it posed a number of risks. AstraZeneca’s shares have dropped by 14% to reach the £41.45 per share mark.
The chairman of AstraZeneca, Leif Johansson, told that the US Company expected a better quoting price than Pfizer’s offer of £55 a share. This way it could prove to be the biggest foreign takeover of a UK company. With Pfizer quoting £53.50 a share, it wasn’t agreeable for AstraZeneca that expected the bid to be at least 10% higher that could put the value of AstraZeneca at about £74 billion. Although Pfizer placed the final bid at £55 a share, along with the increase in the cash portion of the bid from 33% to 45% that included the rest of the amount to be paid in Pfizer shares.
According to Johansson, Pfizer hadn’t told the UK Company about the increased bid and portrayed £53.50 as the final bid. This let the Anglo-Swedish company to believe that this bid was an undervaluing approach for the company’s estimates to produce new drugs as an independent business. He also suggested that Pfizer’s strategy to move itself to the UK for tax issues and its reputation with reducing the research expenditure could jeopardize the future of the merger.
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 minimization. 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. The board is firm in its conviction as to the appropriate terms to recommend to shareholders. We have rejected Pfizer’s final proposal because it is inadequate and would present significant risks for shareholders, while also having serious consequences for the company, our employees and the life-sciences sector in the UK, Sweden and the US.”
The refutation of the deal seems to put an end to the battle between the two firms only if the AstraZeneca shareholders do not change their mind to accept Pfizer’s latest attempt. Johansson said, “I have no idea. This has been going on for quite some time and in very deep engagement over the whole of the weekend. Pfizer now says this is the final offer – I have to believe them at what they say.”
With Pfizer chasing AstraZeneca, the shareholders have a different opinion in all of the shareholders with some calling for AstraZeneca to negotiate with Pfizer while there are others who have acknowledged AstraZeneca’s board member for refusing the bid.
The shadow business secretary Chuka Umunna, said on Twitter that AstraZeneca had rejected Pfizer’s “fast buck” business mentality, “I very much welcome the rejection of Pfizer’s final offer by the board of AstraZeneca. The right decision for the company and for the country. We don’t want to see the takeover of great British firms driven by financial engineering – we want them to be driven by long-term investment.”