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Pfizer ‘significantly undervalued’ AstraZeneca

Published on 29/04/14 at 09:05am
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AstraZeneca has broken its silence to insist that Pfizer’s financial offer in January for the company “very significantly undervalued AstraZeneca and its prospects”.

Its intervention came after Pfizer tried and failed to open communications with AstraZeneca on 26 April for a second time, leaving the US giant ‘considering its options’.

In its first public statement on the issue, Pfizer says that after ‘limited high-level discussions’ in January, AstraZeneca declined to pursue negotiations.

But Pfizer says it sought this month “to renew discussions in order to develop a proposal that could be recommended by both companies to their shareholders”.

AstraZeneca currently has a market value of £51.5 billion ($86.6 billion) but there is speculation that an offer for the company could be as high as $100 billion.

Pfizer’s decision to go public may have increased the pressure on AstraZeneca, which might feel the heat from shareholders keen to see whether a lucrative deal can be done.

However, AstraZeneca warns: “Shareholders are strongly advised to take no action.” It adds: “There can be no certainty that an offer will be made nor as to the terms on which any offer might be made.”

The company says Pfizer chief executive Ian Read contacted its chairman Leif Johansson most recently to suggest that the companies issue a joint statement saying they were in negotiations ‘regarding a combination’.

No offer was made this time, and AstraZeneca’s board decided that it was “not appropriate to engage in discussions with Pfizer” in the absence of a ‘specific and attractive proposal’.

“This deal is still looking unlikely and we may see Pfizer push up the offer,” suggests John Lyon, professor of practice at Warwick Business School.

AstraZeneca was particularly concerned about the proposed structure of the transaction which was put to it in January, “which contained a large proportion of the consideration in Pfizer shares”.

The UK firm says it was told by Pfizer on 15 January “that it was no longer actively considering making an offer”.

AstraZeneca has offered a robust defence of its position, pointing to progress in its diabetes, respiratory and oncology pipelines and the pledge by chief executive Pascal Soriot to halt the slide in global sales in the next three years and focus on what he calls ‘scientific leadership’.

The company also says its share price has performed “strongly and consistently since late last year as AstraZeneca has continued to deliver on its clearly-stated strategy”.

“The Board remains confident in the ongoing execution of AstraZeneca’s strategy as an independent company and that its successful delivery will create significant value for shareholders,” it insists.

Adam Hill

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