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AstraZeneca balks at Pfizer's intent to merge
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Pfizer has announced a “possible offer” it may make on AstraZeneca after negotiations in January broke down.
“In light of recent market developments, Pfizer contacted AstraZeneca on 26 April 2014 seeking to renew discussions in order to develop a proposal that could be recommended by both companies to their shareholders,” Pfizer announced today in a press release.
AstraZeneca, in a separate press release, said its board “considered [Pfizer’s] request and concluded that, absent a specific and attractive proposal, it was not appropriate to engage in discussions with Pfizer.”
The statement added that AstraZeneca believed “the proposal very significantly undervalued” the company during the discussions in January. That preliminary offer consisted of a 70/30 split of 1.758 Pfizer shares per AstraZeneca share and £13.98 (about $23.50 USD) in cash per AstraZeneca share. The total proposal is said to represent £46.61 (about $78 USD) per AstraZeneca share, based on the closing price of Pfizer shares of $30.52 at the time.
“As in its previous proposal, Pfizer is considering a possible transaction in which AstraZeneca shareholders would receive a significant premium for their AstraZeneca shares, to be paid in a combination of cash and shares in the combined entity,” according to the Pfizer release, which added that the move would be a “highly compelling opportunity” for shareholders.
Although a specific offer has not been made publicly, Pfizer said if the merger were to take place, the two companies would be combined with a new name and operations based in the United Kingdom.
“Pfizer would expect the combined company to have management in both the United States and the United Kingdom, and to maintain head offices in New York and list its shares on the New York Stock Exchange,” the statement said.
Ian Read, chairman and CEO of Pfizer, said that commitment to research and development would remain if the two companies merged.
“We believe patients all over the globe would benefit from our shared commitment to R&D, which is critical to the future success of the pharmaceutical industry, in the form of potential new therapies that help to fight some of the world’s most feared diseases, such as cancer,” he said.