Pfizer ups offer for AstraZeneca as takeover talks continue

US drugmaker raises offer for British rival to £50 a share or £63 billion after earlier bid was rebuffed

Pfizer disclosed earlier this week that it had twice approached AstraZeneca about a takeover, only to be rebuffed in both cases.  Photographer: Chris Ratcliffe/Bloomberg

Pfizer disclosed earlier this week that it had twice approached AstraZeneca about a takeover, only to be rebuffed in both cases. Photographer: Chris Ratcliffe/Bloomberg

 

US drugmaker Pfizer has raised its offer for AstraZeneca to £50 a share or £63 billion ($106 billion), adding that the British drugmaker was reviewing the proposal.

AstraZeneca earlier rebuffed a proposal valuing it at just under $100 billion, or £46.61 per share.

According to reports, Pfizer and AstraZeneca have resumed talks about a trans-Atlantic merger of the two drug giants after Pfizer sweetened the terms of an earlier takeover offer for its British rival..

The renewed discussions suggest that the two sides might be getting closer to striking a friendly deal, but there is no guarantee the talks will go anywhere, the Wall Street Journal said.

Bloomberg reported earlier in the day that Pfizer may sweeten its offer for AstraZeneca to more than £63 billion, or $106 billion, and raise the cash portion of the deal, to kickstart negotiations.

Pfizer disclosed earlier this week that it had twice approached AstraZeneca about a takeover, only to be rebuffed in both cases.

Pfizer and AstraZeneca declined to comment. Since Pfizer went public with its approach to AstraZeneca, investors and analysts have been expecting the largest US drugmaker would come back with more than its initial offer worth £58.8 billion ($98.9 billion) and increase the cash component.

Under British takeover rules, Pfizer has until May 26th to announce its intent to make an offer for AstraZeneca, or walk away.

When Astra turned down the Pfizer offer, it did not simply say that the bid significantly undervalued the company; it put a “very” in front of it, noted John Boris, an analyst with SunTrust Robinson Humphrey.

“They’re basically saying ‘come back to me with a materially higher offer,’” said Mr Boris. He predicted that Pfizer would raise the offer to about $110 billion, or $87 a share.

A purchase of AstraZeneca would not only bolster Pfizer’s pipeline of cancer drugs in development, but allow it to redomicile in Britain to take advantage of significantly lower tax rates there, and to use tens of billions of dollars it has overseas without having to pay high taxes for bringing the cash back to the United States.

Pfizer shares closed 0.4 per cent lower at $31.15 on the New York Stock Exchange yesterday.

Reuters