Sudip Kar-Gupta and Ben Hirschler London
AstraZeneca shares gained as much as 2.2 percent yesterday on speculation that US drug maker Pfizer was about to return with a higher bid worth more than £53 (R932) a share, traders said.
A bid at that level would value Britain’s second-biggest pharmaceuticals firm at about $113 billion (R1.2 trillion).
Pfizer’s pursuit of AstraZeneca in potentially the biggest ever foreign takeover of a British firm has provoked a political storm, with Prime Minister David Cameron demanding Pfizer give stronger guarantees it will keep jobs and investment in the country.
Pfizer’s previous approach, which was rejected by AstraZeneca’s board, initially valued the group at $106bn – but the value of that cash-and-stock offer has since slipped because of a fall in Pfizer shares following weak quarterly results.
A stock market report in the Daily Mail newspaper said many investors believed Pfizer was working with its advisers on a “knockout offer” of more than £53 a share that would be made by the weekend. The stock rose as high as £47.35 in London yesterday.
“The deal is not there, but it’s not off the table either,” Dafydd Davies, a senior trader at London-based Prime Wealth Group, said.
Pfizer chief executive Ian Read is heading to London next week to lay out his case for a merger in front of two parliamentary committees. A Pfizer spokesman had no comment on the company’s bid plans.
Investors are betting that a deal will be done, despite the political noise. “One way or another, I think the deal will go ahead,” Beaufort Securities sales trader Basil Petrides said.
Analysts at Barclays, who believe Pfizer could make the deal pay at any price up to £56 a share, said in a note to clients last Friday that AstraZeneca shares could fall 21 percent if the US company walked away.
AstraZeneca laid out a defence strategy on Tuesday by flagging up the potential of a range of promising experimental medicines that it said would boost sales by three quarters over the next decade.
Chief executive Pascal Soriot and his management team are now following up with a series of meetings with leading shareholders to get their feedback. The British group has not ruled out a deal altogether and people familiar with the matter said it was willing to talk if there was a compelling offer.
Soriot, who is credited with reviving the company’s drug pipeline, has won the support of a number of investors, including leading shareholder Investor, which owns 4.1 percent and has had a stake in forerunner Astra since 1924. Investor’s Marcus Wallenberg also sits on the drug maker’s board.
Several other large shareholders, however, have said that they would favour engagement with Pfizer to secure a higher offer. – Reuters