Saturday 24 March 2018

Pfizer has days to save €74bn takeover bid

Pharmaceutical firm Pfizer must decide by May 26
Pharmaceutical firm Pfizer must decide by May 26
British drugmaker AstraZeneca said it was targeting annual revenues of more than $45 billion by 2023, upping its defence against a takeover bid from US rival Pfizer

Ben Hirschler and Anjuli Davies

Pfizer is considering increasing its offer for AstraZeneca as it battles to nail down a £60bn (€74bn) takeover in the next seven days.

Under 'put up or shut up' UK takeover rules, Pfizer must make a formal approach for its British rival by May 26 or walk away.

The US drugs giant faces a political backlash from Sweden, the UK and US over the deal, however, as well as from scientists and not least AstraZeneca shareholders looking to maximise any new offer.

Pfizer still hopes to get AstraZeneca into negotiations before the deadline, but has not ruled out a hostile bid in the $100bn-plus takeover fight, people familiar with the matter said.

US-based Pfizer employs 3,200 staff here at plants across the country, including at Ringaskiddy, Co Cork, Askeaton Co Limerick, Newbridge, Co Kildare, and in Dublin.

UK-based AstraZeneca has a small number of Irish staff, mainly working in sales and distribution.

Pfizer is trying to take over AstraZeneca in a bid to become the world's largest drugs company, with a headquarters in New York but a tax base in Britain.

While executives would prefer to see their offer recommended by the AstraZeneca board, which would allow them access to AstraZeneca's books, they are understood not to have ruled out a hostile bid.

"Going hostile is the least favourite option but taking the offer direct to shareholders is a possibility," said one source.

Pfizer made a cash-and-stock takeover approach worth $106bn or £50 a share on May 2, although its value has since slipped to about £48, reflecting a fall in Pfizer's shares.

The gap in pricing the company between the two sides is described as "meaningful" and "significant" by sources, suggesting Pfizer will have to make a sizeable jump in price to secure engagement with its rival.

In rejecting Pfizer's May 2 proposal, AstraZeneca argued that the price undervalued it substantially and the offer also exposed shareholders to significant risks, since 68pc of the transaction would be in Pfizer shares rather than cash.

Chief executive Pascal Soriot has laid out details of AstraZeneca's promising pipeline of new drugs and argues there is "no inevitability" about the Pfizer deal, although he also acknowledges the board would have to consider a compelling bid.

Investors have backed AstraZeneca in rejecting £50 a share but many want it to engage if Pfizer comes back with an improved offer, with two banking sources describing £55 as the "magic number" at which a deal could get done.

Pfizer said last week that working with the UK company's board could help deliver "optimal deal terms" that AstraZeneca could recommend to its shareholders.

There has been a mounting political backlash against the proposed deal in Britain, the US and Sweden, where AstraZeneca has half its roots.

The Swedish government launched a concerted fightback on Friday against a merger it fears will lead to cuts in science jobs and research, echoing concerns aired by British lawmakers at two parliamentary hearings last week and fears for US jobs in states where AstraZeneca has a large presence. (Reuters)

Irish Independent

Business Newsletter

Read the leading stories from the world of Business.

Also in Business