Pfizer pursues £58.8b takeover offer for AstraZeneca

Earlier rejection from AstraZeneca fails to sway US firm's interest in a deal that could be one of the largest in the pharmaceutical industry

PUBLISHED : Tuesday, 29 April, 2014, 1:15am
UPDATED : Tuesday, 29 April, 2014, 5:09am

Pfizer has proposed buying AstraZeneca for about £58.8 billion (HK$765.7 billion) and is still interested in a deal after the British company spurned the offer.

Pfizer proposed buying AstraZeneca on January 5 for £46.61 a share in cash and stock, and AstraZeneca declined to pursue negotiations, the New York-based firm said in a statement yesterday. That was about 14 per cent above AstraZeneca's closing price last Friday.

A Pfizer acquisition of Britain's second-largest pharmaceutical company would be one of the largest takeovers in the industry's history.

Pfizer wants to negotiate an agreement that AstraZeneca's board can recommend to shareholders and the United States drugmaker said it was "currently considering its options".

"The combination of Pfizer and AstraZeneca could further enhance the ability to create value for shareholders of both companies and bring an expanded portfolio of important treatments to patients," Pfizer chief executive Ian Read said.

"A potential combination with AstraZeneca aligns with Pfizer's current structure and fully supports its existing strategy to build world-class businesses."

An acquisition of AstraZeneca would add to the US$127 billion of mergers in the pharmaceutical sector this year.

An industrywide recalibration that has been building since 2011 reached a peak last week with a flurry of activity by GlaxoSmithKline, Novartis and Valeant Pharmaceuticals International.

AstraZeneca was reviewing Pfizer's statement, spokeswoman Esra Erkal-Paler said, without elaborating further.

Shares in AstraZeneca have gained 14 per cent this year.

The average premium for pharmaceutical takeovers of at least US$1 billion was 30 per cent over the past five years, data showed.

Under Pfizer's proposal, the two companies would be combined into a British-based holding company, with headquarters in New York, Pfizer said.

Buying AstraZeneca would allow the company to use some of the US$70 billion of cash it has built up overseas that would be subject to taxes if brought back to the US.

A deal with AstraZeneca would also help Pfizer add early-stage drugs in a field of cancer treatments that use the body's own immune cells to recognise and attack tumours.

AstraZeneca announced in January an agreement with Immunocore to develop treatments that use immune cells, and it also has several of its own immune-based drugs being tested in multiple cancers.

Pfizer has reorganised its business over the past three years, shuttering some research projects and emphasising others.

Sales are projected to climb at a compound annual rate of 0.5 per cent over the next five years, trailing the median rate of 2.4 per cent for its closest competitors.