Drew Armstrong, Oliver Staley and Matthew Campbell New York and London
Pfizeryesterday abandoned its effort to buy AstraZeneca for £69.4 billion (about R1.2 trillion) in what would have been the biggest deal ever in the drug industry.
The offer represented “full value” for AstraZeneca, the New York-based drugmaker said in a statement. Under UK takeover rules, the company had until 5pm London time yesterday to make a firm offer.
Under UK government rules, the two drug makers face a cooling-off period of at least three months before talks can restart, giving both time to figure out their next move.
Pfizer was hoping that AstraZeneca investors would use that time to put pressure on the UK company’s board to come back to the table, the person said, while AstraZeneca might seek a revenue-generating acquisition to help it fend off the larger company.
“The probability of a future AstraZeneca acquisition is dimmed, but not entirely extinguished,” Mark Purcell, an analyst with Barclays, said in a note to clients.
Pfizer has declined to say if it would try again to buy AstraZeneca after the UK company’s board rejected its last offer of £55 a share. For talks to begin anew after three months, AstraZeneca must invite the discussion. Otherwise, Pfizer needs to wait six months to make a new bid.
“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,” Pfizer chi_ef executive Ian Read said in the statement. “As we said from the start, the pursuit of this transaction was a potential enhancement to our existing strategy.”
AstraZeneca rose 1.2 percent to close at £43.28 on Friday. Pfizer fell 0.6 percent to $29.49 (R303.21). Stock markets in the US and the UK were closed for holidays yesterday.
Both companies set themselves up with massive expectations during a public debate over the proposed deal. AstraZeneca has predicted sales of $45bn by 2023, a 75 percent increase from last year. The company has bet on a new class of cancer drugs that use the body’s immune system to attack tumours, experimental drugs Pfizer has said it coveted.
Pascal Soriot, AstraZeneca’s chief executive, “made a bet on the pipeline and he will be under pressure to deliver on the targets he gave to the market, which are very bullish and, in my opinion, not too realistic”, Odile Rundquist, a Helvea analyst based in Geneva, said.
For its part, Pfizer must entice AstraZeneca back to the bargaining table or face the prospect of seeking lesser deals that offer slower growth. There are few large targets that would, like AstraZeneca, let Pfizer cut its tax rate by moving its legal address abroad, find cost savings and get a basket of promising new drugs.
The goal for Pfizer may be to let AstraZeneca’s biggest shareholders do the persuading for them. Investors representing 16 percent of AstraZeneca shares indicated they favoured new negotiations with Pfizer, while 7 percent are against a deal, according to data compiled by Bloomberg and media reports as of Thursday.
BlackRock, AstraZeneca’s biggest shareholder with 8 percent of the stock, was encouraging discussions between the companies, a person familiar with the matter said last week. – Bloomberg