Monthly Archives: May 2014

Pfizer walks away from $118 billion AstraZeneca takeover fight

The Pfizer logo is seen at their world headquarters in New York April 28, 2014.
Credit: Reuters/Andrew Kelly

(Reuters) – Pfizer abandoned its attempt to buy AstraZeneca for nearly 70 billion pounds ($118 billion) on Monday as a deadline approached without a last-minute change of heart by the British drugmaker.
The decision ends a month-long public fight between two of the world’s biggest pharmaceutical companies that sparked political concerns on both sides of Atlantic over jobs and corporate tax maneuvers.British rules now require an enforced cooling-off period. AstraZeneca could reach out to Pfizer after three months and Pfizer could take another run at its smaller British rival in six months time, whether it is invited back or not.Pfizer’s move came two hours before a 5.00 pm (1200 ET) deadline to make a firm offer or walk away, under UK takeover rules. Its decision to quit the stage, at least for now, had been widely expected after AstraZeneca refused its final offer of 55 pounds a share.”Following the AstraZeneca board’s rejection of the proposal, Pfizer announces that it does not intend to make an offer for AstraZeneca,” Pfizer said in a short news release.The biggest U.S. drugmaker promised it would not go hostile by taking its offer directly to AstraZeneca shareholders, leaving the fate of what would have been the world’s largest ever drugs merger in the hands of its target, whose board would have had to make a complete U-turn to get a deal done.”We continue to believe that our final proposal was compelling and represented full value for AstraZeneca based on the information that was available to us,” said Ian Read, Pfizer’s chairman and chief executive.Pfizer’s final offer was at a price that many analysts and investors had previously suggested would bring AstraZeneca to the table for serious negotiations.But in rejecting an earlier offer of 53.50 pounds as undervaluing the company, the British group indicated it needed a bid more than 10 percent higher, or at least 58.85 pounds per share, for its board to consider a recommendation.Pfizer had urged AstraZeneca shareholders to agitate for engagement and several expressed disappointment at its intransigence, although others – encouraged by AstraZeneca’s promising drug pipeline – backed the firm’s standalone strategy.AstraZeneca Chairman Leif Johansson welcomed Pfizer’s decision to back down, which he said would allow the British company to focus on its growth potential as an independent company.What happens next will depend upon whether AstraZeneca’s share price deteriorates in the coming weeks and how hard its shareholders push for it to revisit a deal with Pfizer.BlackRock, AstraZeneca’s biggest shareholder, backed the board’s rejection of Pfizer’s 55 pounds a share offer, but urged it to talk again in the future.POLITICAL OPPOSITIONThe proposed transaction ran into fierce opposition from politicians in Britain, Sweden – where AstraZeneca has half it roots – and the United States over the likelihood that the marriage would lead to thousands of job cuts.Ultimately, it was price and the lack of room for eleventh-hour maneuvering by Pfizer that killed the deal.Pfizer had several reasons for taking aim at AstraZeneca for what would have been its fourth mega-merger in 14 years.Highest on the list appeared to be Pfizer’s desire to take part in a recent trend of so-called tax inversions, under which it could reincorporate in Britain and pay significantly lower corporate tax. Pfizer would also be able to use tens of billions of dollars it has parked overseas, avoiding high U.S. taxes for repatriating the huge cash pile.Pfizer also had its eye on a promising portfolio of drugs in AstraZeneca’s developmental pipeline, especially several potentially lucrative cancer medicines.It was this pipeline that AstraZeneca management used to make its case for Pfizer significantly undervaluing the company.Chief Executive Pascal Soriot went as far as making a 10-year forecast for a 75 percent rise in sales by 2023.”As we said from the start, the pursuit of this transaction was a potential enhancement to our existing strategy,” Pfizer’s Read said. “We will continue our focus on the execution of our plans, bringing forth new treatments to meet patients’ needs and remaining responsible stewards of our shareholders’ capital.”The merger would have restored Pfizer as the world’s largest drugmaker by sales, a position it relinquished to Swiss-based Novartis when billions of dollars in annual revenue evaporated after its top-selling cholesterol fighter Lipitor began facing generic competition in 2011.(Editing by David Evans and Mark Potter)
Source: Newsjyoti Market News

See you later? Slim Pfizer deal hopes prop up AstraZeneca

The Pfizer logo is seen at their world headquarters in New York April 28, 2014.
Credit: Reuters/Andrew Kelly

(Reuters) – Pfizer’s (PFE.N) chances of striking a deal to buy AstraZeneca (AZN.L) in the coming days look vanishingly small, but the notion it could return later this year is propping up the British drugmaker’s shares.
The stock rose 3 percent on Wednesday, despite AstraZeneca insisting on Tuesday there wasn’t the slightest chance of Pfizer’s $118 billion offer being increased by a May 26 deadline set by UK takeover rules.While Pfizer agrees it cannot raise its final offer of 55 pounds a share, its advisers have been urging investors to speak up against AstraZeneca’s decision to reject its proposal, according to several people familiar with the matter.One suggestion now circulating is that disgruntled AstraZeneca shareholders could call an extraordinary general meeting (EGM) to put Pfizer’s offer to a vote. The support of just 5 percent of shareholders is needed to call such a meeting.Even if shareholders wanted to revive the bid – or oust the board – an EGM would not come in time to rescue the current process before the takeover rules deadline, but they could force AstraZeneca to open communications with Pfizer in late August, after a compulsory three-month cooling-off period.”Some of the more active hedge funds, instead of selling out are buying in,” said one hedge fund investor. “There has been sufficient shareholder dissatisfaction about this deal that investors can use that to get a favourable outcome further down the road.”The only way a deal could be salvaged this month would be for AstraZeneca Chairman Leif Johansson and his board to make a complete U-turn and recommend Pfizer’s current 55-pound offer, which looks out of the question.More leading shareholders spoke out publicly on the deal on Wednesday, but they didn’t speak with one voice, underlining the challenge facing the Pfizer camp in trying to stir an investor rebellion.Threadneedle Asset Management came out in support of AstraZeneca’s stance, while investment and insurance group AXA said the board should not have prevented Pfizer’s offer being put to investors.The AXA view was echoed by Legal & General, according to the Wall Street Journal. An L&G spokesman confirmed to Reuters that the fund manager had talked to both companies but declined to comment further.EVENLY BALANCEDTo date, investors representing around 10 percent of AstraZeneca’s share base have spoken out against the board’s decision, with a similar number broadly lending their support, according to Thomson Reuters data.At more than 44 pounds, the shares remain well short of Pfizer’s offer but a fair way above the undisturbed price of 37.82 pounds seen before news of Pfizer’s interest emerged in mid-April.A recent run of favourable clinical trial news about AstraZeneca’s new drugs has also supported the stock, with UBS issuing a note on Wednesday setting a price target for the shares of 50 pounds, without a Pfizer deal.Analysts at Barclays, who have a 40 pounds target, said in a note that the market was pricing in a probability of around 15 percent that there would eventually be an agreed deal with Pfizer valuing AstraZeneca at some 60 pounds.The U.S. company’s ambitions to create the world’s largest drugmaker – and slash its tax bill in the process – appeared within reach at one point in talks between the two sides last weekend, with AstraZeneca indicating a desired price of 58.85 pounds.But AstraZeneca’s Johansson told Reuters on Monday that Pfizer had closed down discussions after a telephone call lasting more than an hour on Sunday and had surprised AstraZeneca by issuing its final offer later that night.(Reporting by Ben Hirschler; Editing by Will Waterman)
Source: Newsjyoti Market News

AstraZeneca rejects Pfizer's take-it-or-leave-it offer

The Pfizer logo is seen at their world headquarters in New York April 28, 2014.
Credit: Reuters/Andrew Kelly

(Reuters) – Britain’s AstraZeneca on Monday rejected a sweetened and “final” offer from Pfizer, puncturing the U.S. drugmaker’s plan for a merger to create the world’s biggest pharmaceuticals group.
The rebuff came nine hours after Pfizer said on Sunday night it had raised its takeover offer to 55 pounds a share, or around 70 billion pounds ($118 billion) in total, and would walk away if AstraZeneca did not accept it.The rejection left some major shareholders fuming as shares in AstraZeneca slumped 11 percent to close at 42.88 pounds after falling as much as 15 percent – their biggest ever intra-day decline. Pfizer rose 1 percent in New York.AstraZeneca Chairman Leif Johansson told Reuters he now saw no prospect of a deal with Pfizer before a deadline of May 26 set under British takeover rules, or any likelihood of that deadline being extended.Experts also said Pfizer had left itself no room to return with a last-minute higher offer due to the strict takeover code.Pfizer wants to create the world’s largest drugs firm, with a headquarters in New York but a tax base in Britain, where corporate tax rates are lower than in the United States. The plan has met entrenched opposition from AstraZeneca, as well as politicians and scientists who fear cuts to jobs and research.”It died of multiple wounds. Too little cash, too many suspicions about Pfizer’s motives, and too little confidence in its assurances about jobs,” said Erik Gordon, professor at the University of Michigan’s Ross School of Business. “Pfizer’s chances are going down, despite its offer of a higher price.”Johansson said he had made clear in discussions with Pfizer that his board could only recommend a bid that was more than 10 percent above an offer of 53.50 pounds made by Pfizer on Friday, which would amount to at least 58.85 pounds. He blamed Pfizer for calling a halt to discussions after a telephone call lasting more than an hour with Pfizer’s chairman and CEO Ian Read on Sunday afternoon.In addition to the inadequate price, Johansson also slammed what he said was a lack of industrial logic behind Pfizer’s move; the risks posed to shareholders by the controversial tax plans; and the threat to life science jobs in Britain, Sweden and the United States.”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,” Johansson said in a statement.”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.”But many of Johansson’s shareholders were deeply unimpressed. “We do not think the Astra management have done a good job on behalf of shareholders,” said one fund manager at a top-10 investor in the group.Alastair Gunn of top-30 shareholder Jupiter Fund Management said: “We are disappointed the board of AstraZeneca has rejected Pfizer’s latest offer so categorically. They should have at least engaged in a constructive conversation with Pfizer.”However, Pfizer’s proposed takeover, which would be the largest-ever foreign acquisition of a British company, is opposed by many scientists and politicians who fear it would undermine Britain’s science base.The U.S. group said its new offer was final and could not be increased. It said it would not make a hostile offer directly to AstraZeneca shareholders and would only proceed with an offer with the recommendation of the AstraZeneca board.Pfizer had also increased the cash element in its offer to 45 percent, under which AstraZeneca shareholders would get 1.747 shares in the enlarged company for each of their AstraZeneca shares and 24.76 pounds in cash.The new offer represents a 15-percent premium over the current value of a cash-and-share approach made on May 2 – worth 50 pounds a share at the time – which was also swiftly rejected by AstraZeneca.Pfizer’s Read said he believed his proposal was “compelling” for AstraZeneca shareholders and expressed frustration at its refusal to talk, urging the British company’s shareholders to pressure its board to engage.TAKE A BREAKIn the absence of further discussions or an extension of the deadline for making a firm offer under British takeover rules, Pfizer’s proposal will expire at 5 p.m. (1600 GMT) on May 26. After that, it would have to wait six months before making another bid.”AstraZeneca will have six months to demonstrate that it was right to reject Pfizer’s offer, or face the prospect of a fresh approach,” said analyst Mick Cooper at Edison Investment Research.While Pfizer would have to wait on the sidelines until November, it would be possible for AstraZeneca to initiate talks from late August, if it decided it wants coax a higher offer.The latest increased offer had been widely expected. Pfizer said last week it would consider a higher offer as it urged AstraZeneca’s board to enter talks.The British firm has laid out details of its pipeline of new drugs and argues it has no need for a deal. However, many analysts believe its projections that it can increase sales by 75 percent to $45 billion a year by 2023 are over-optimistic.There has been a mounting political backlash against the proposed deal in Britain, the United States and Sweden, where AstraZeneca has half its roots.The Swedish government launched a concerted effort on Friday against a merger that 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 U.S. jobs in states where AstraZeneca has a large presence.British Prime Minister David Cameron has said he wanted more assurances from Pfizer, in the event of a takeover, although as the head of the free-market Conservative Party he does not want to be seen to be deterring foreign corporate investment.Pfizer gave a five-year commitment to complete AstraZeneca’s new research centre in Cambridge, retain a factory in northern England and put a fifth of its research staff in Britain, but added that these pledges could be adjusted if circumstances changed “significantly”.The tax aspects of the deal, meanwhile, have sparked anger in the United States, where lawmakers are now considering legislation to prevent what are known as corporate inversions, under which U.S. companies re-incorporate overseas to avoid U.S. taxes.Inversions have helped fuel a wave of deals in the pharmaceuticals sector in recent months. Buying AstraZeneca would allow Pfizer to carry out the largest such deal yet.(Additional reporting by Chris Vellacott, Jemima Kelly, Kate Holton and Anjuli Davies in London; Editing by Eric Walsh, David Holmes, Alastair Macdonald and Philippa Fletcher)
Source: Newsjyoti Market News

Pfizer raises bid for AstraZeneca to $117 billion

The Pfizer logo is seen at their world headquarters in New York April 28, 2014.
Credit: Reuters/Andrew Kelly

(Reuters) – U.S. drugmaker Pfizer said on Sunday it had raised its offer for British rival AstraZeneca to 69.3 billion pounds ($116.6 billion), or 55 pounds a share, and would walk away if AstraZeneca did not accept it.
Pfizer wants to create the world’s largest drugs company, with a headquarters in New York but a tax base in Britain, where corporate tax rates are lower than in the United States. It has met entrenched opposition from AstraZeneca, as well as many politicians and scientists who fear cuts to jobs and research.The U.S. group said its new offer was final and could not be increased. It said it would not make a hostile offer directly to AstraZeneca shareholders and would only proceed with an offer with the recommendation of the AstraZeneca board.Pfizer also increased the cash element in its offer to 45 percent, with AstraZeneca shareholders set to receive 1.747 shares in the enlarged company for each of their AstraZeneca shares and 2,476 pence in cash.Two banking sources earlier described 55 pounds a share as the “magic number” at which a deal could get done.Pfizer said it had written to AstraZeneca’s chairman on May 16 offering 53.50 pounds a share but had been told that this still substantially undervalued the company, prompting it to make a further sweetened offer. AstraZeneca had already rejected an earlier approach worth 50 pounds a share on May 2.”We believe our proposal is compelling for AstraZeneca’s shareholders and that a Pfizer-AstraZeneca combination is in the best interests of all stakeholders,” Pfizer Chief Executive Ian Read said in a statement.He expressed frustration at AstraZeneca’s refusal to engage in talks and urged the British company’s shareholders to pressure its board to start discussions.”Following a conversation with AstraZeneca earlier today, we do not believe that the AstraZeneca board is currently prepared to recommend a deal at a reasonable price,” Read said. “We remain ready to engage in a meaningful dialogue but time for constructive engagement is running out.”In the absence of further discussions or an extension of the deadline for making a firm offer under British takeover rules, Pfizer’s proposal will expire at 5 p.m. London time on May 26.AstraZeneca said it had no immediate comment on Pfizer’s latest move.DRUG PIPELINE HOPESThe British firm has laid out details of its pipeline of new drugs and argues there is no inevitability about a Pfizer deal, although its management also acknowledges the board would have to consider a compelling bid.Investors have backed AstraZeneca in rejecting 50 pounds a share, but many have said they would want it to engage in discussions if Pfizer came back with an improved offer.There has been a mounting political backlash against the proposed deal in Britain, the United States and Sweden, where AstraZeneca has half its roots.The Swedish government launched a concerted effort 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 U.S. jobs in states where AstraZeneca has a large presence.Pfizer’s bid would be the largest foreign takeover of a British firm and is opposed by many scientists and politicians who fear it will undermine Britain’s science base.British Prime Minister David Cameron has said he wants more assurances from Pfizer, and science minister David Willetts said last week he would like to see longer guarantees on investment than the five years currently promised by Pfizer.The UK government has also held exploratory discussions with Brussels about strengthening its ability to force Pfizer to honor commitments on jobs and research under European Union rules.But Cameron, head of the free-market Conservative Party, has also said Britain does not want to be seen to be pulling up the drawbridge to foreign companies.($1 = 0.5942 British Pounds)(Editing by Larry King and Cynthia Osterman)
Source: Newsjyoti Market News

Pfizer pledges to ringfence key new drugs in AstraZeneca deal

(Reuters) – Pfizer (PFE.N) said it would ringfence the development of important drugs if it acquired AstraZeneca (AZN.L), rejecting a charge from the British company that a takeover would disrupt important research and put lives at risk.
“As we put these companies together, we will continue with our pipeline, AZ will continue with theirs,” Pfizer’s Chief Executive Ian Read told lawmakers on a second day of questioning about what could be the biggest ever UK corporate deal.”We would ringfence any important products and they would continue to be developed. There is absolutely no truth to any comment that some products of critical nature would be delayed getting to patients, if anything we would accelerate that to patients.”AstraZeneca said on Tuesday that Pfizer’s proposal risked disrupting its research and delaying getting life-saving new drugs to market, as well as undervaluing the business.”What will we tell the person whose father died from lung cancer because one of our medicines was delayed – and essentially was delayed because in the meantime our two companies were involved in saving tax and saving costs?” the British company’s Chief Executive Pascal Soriot said on Tuesday.On a second day in Parliament focused on the concerns of the science community, Read faced calls from a committee of lawmakers and other speakers for Pfizer to extend its commitment to UK jobs and research from five years to 10 or more.”I would like to see a longer period than that (five years),” science minister David Willetts told the committee.British Prime Minister David Cameron said he was seeking the best possible guarantees from Pfizer.”This government has been absolutely clear that the right thing to do is get stuck in to seek the best possible guarantees on British jobs, on British investment, and British science,” he told lawmakers in parliament on Wednesday.The U.S. boss had earlier defended his five-year horizon, saying it was enough time to select medicines that had the greatest chance of approval and the biggest opportunity to meet the needs of patients.Pfizer had changed its R&D strategy to avoid lengthy, and ultimately fruitless, research by bringing in commercial and development expertise at the proof of concept stage in the assessment of experimental drugs, he said.”It’s very important for me for productivity to … hold (scientists) accountable, to say ‘I’m allocating you capital on a five-year period and I’m going to review that on five-year periods’,” he said.Pfizer has indicated it could raise its offer for Britain’s second-biggest drugmaker from $106 billion, if AstraZeneca is prepared to talk, but lawmakers are deeply concerned about the impact of a takeover on the country’s science base.The U.S. company has a record of making deep job cuts after past takeovers of companies including Wyeth, Warner-Lambert and Pharmacia.FEWER SCIENTISTSRead said on Wednesday there would likely be fewer scientists in a newly combined company than currently work in the two firms, but he declined to put any numbers on it.Nobel laureate Paul Nurse, the president of the Royal Society, Britain’s national academy of science, wrote to the chairman of Parliament’s science committee Andrew Miller to express his concern that Pfizer’s promises so far were vague and inadequate.Pfizer’s five-year commitment includes completing AstraZeneca’s new research center in Cambridge, retaining a factory in the northwestern English town of Macclesfield and putting a fifth of its research staff in Britain if the deal goes ahead.But it has also said this could be altered if circumstances changed “significantly” and Scottish-born Read said he could not commit to maintaining a specific R&D budget for Britain.Nurse said a five-year pledge was simply not good enough.”A five-year commitment to the UK is insufficient. A commitment of at least 10 years is required. Science is not a quick win,” he wrote.AstraZeneca has rejected Pfizer’s cash-and-stock offer, which was worth 50 pounds a share at the time it was made on May 2, arguing it has a bright future as an independent business, with a pipeline of promising new drugs.So-called Parliamentary select committees cannot block corporate transactions but they can question executives ferociously, as banks, energy companies and Rupert Murdoch’s News Corp (NWSA.O) have all found out in the past.(Additional reporting by William James; Editing by Mark Potter, Greg Mahlich)
Source: Newsjyoti Market News