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AstraZeneca once again rejects sweetened Pfizer takeover bid

By Zachary Brennan+

19-May-2014

Despite a nearly $15bn increase in its offer, AstraZeneca has once again rejected Pfizer’s attempt to take over its British rival. 

The latest “final” offer from Pfizer, which amounted to nearly $120bn for AstraZeneca, still was deemed too low by management at AZ.

Leif Johansson, Chairman of AstraZeneca said that “the price at which the Board of AstraZeneca would be prepared to provide a recommendation would have to be more than 10% above the level contained in Pfizer’s Friday Proposal. The Final Proposal is a minor improvement which continues to fall short of the Board’s view of value and has been rejected.”

Despite assurances that Pfizer would keep a “substantial” level of manufacturing in the UK, as well as a commitment to keep 20% of its R&D staff on the island, AZ management seems to still deem the offer to be too low.

While it would appear that the deal is dead in the water, AZ shareholders could push the company to negotiate further with Pfizer.

Analyst Mack Shoenebaum wrote in a note to investors this morning: “Our desk believes it’s now in [AstraZeneca] shareholders’ hands and that this is effectively a ‘hostile’ tender offer.”

Pfizer also is calling on supportive AZ shareholders to urge AZ’s board to begin substantive engagement with Pfizer and extend the period for such talks prior to the May 26 deadline for making an offer.

This may be a move worth consideration as shares of AZ have plunged more than 10% in early trading this morning.

But AZ management seems compelled to continue to nix Pfizer’s offers until Pfizer can come up with a more suitable business plan for the combining the companies.

Johansson added: “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 minimisation. 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.

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