Saturday 26 May 2018

Pfizer planning $100bn takeover bid for UK firm AstraZeneca

A specialist trader works at a post that trades AstraZeneca on the floor of the New York Stock Exchange
A specialist trader works at a post that trades AstraZeneca on the floor of the New York Stock Exchange
John Mulligan

John Mulligan

Drug giant Pfizer, which employs about 3,200 people in Ireland, is pushing ahead with plans to execute the world's biggest pharmaceutical take- over as it pursues Britain's AstraZeneca in a $100bn (€72bn) courtship.

If Pfizer succeeds, it would also mark the biggest takeover in UK history. It would also see the combined group incorporated in the UK for tax purposes. But Pfizer has already been given the cold shoulder by AstraZeneca, with an overture made by the US firm in January already rebuffed.

That prompted Pfizer to go public yesterday with its intent. It confirmed that it made a non-binding expression of interest to the AstraZeneca board earlier this year, but that the British firm decided not to pursue negotiations.

Pfizer had offered £46.61bn (€56.56bn) in cash and stock, mostly the latter, for AstraZeneca, but the British firm believed it "very significantly undervalued" its business. That price was 14pc above the closing price of AstraZeneca's shares last Friday. Analysts believe Pfizer will have to offer well above £50 per share to conclude a deal.

"They're sellers, we're buyers," said Pfizer chief executive Ian Read. "Of course they're going to say it's undervalued."

Mr Read contacted AstraZeneca chairman Leif Johansson last Saturday in an effort to re-ignite the takeover process. Pfizer now has until May 26 to say whether or not it will launch a formal offer for AstraZeneca. The deal would enable Pfizer to use some of the $70bn in cash it has amassed overseas that would be hit with tax if it was repatriated to the United States.

Accounts for its Netherlands-based European holding company show that unit had $9.5bn in cash at the end of 2012. Most of the companies Pfizer has registered in Ireland are unlimited, shielding their performance and financial makeup from the public.

AstraZeneca is one of the few top global drug companies without a manufacturing operation in Ireland. It employs fewer than 100 people here, involved in sales, marketing and ad- ministration.

Pfizer, along with other major drug firms, has been battling a so-called patent cliff that has seen rights to top-selling treatments expire, creating a revenue vacuum. That's seen the drug companies target takeovers as a way of shoring up their longer-term prospects.

Acquiring AstraZeneca would give Pfizer access to a promising drug development pipeline. It would see the US group add drugs being developed to treat cancer by using the body's immune cells to recognise and attack tumours. But some of AstraZeneca's biggest drugs are also poised to lose patent protection.

Irish Independent

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