AstraZeneca Eschews $119 Billion Proposition by Pfizer

astrazenecaAstraZeneca, one of the largest prescription drug makers in the United Kingdom, of Anglo-Swedish origin, eschews a takeover proposition of $119 billion from the American drug maker Pfizer. AstraZeneca stated that the latest monetary bid underestimated the company’s attractive expectations and value as a whole. Many describe the event as being Pfizer’s last bid in an attempt to create what they are calling the planets biggest pharmaceutical community. The American company has until May 26, 2014, to plan another way to see if AstraZeneca is interested in merging. However, that date is Memorial Day in the United States, a civic holiday, and is the United Kingdom’s Spring Bank Holiday, a holiday in that country.

Pfizer has stated that they did not believe that the United Kingdom company was ready yet to make a compromise to what they considered a fair price in reaching a deal. The American company has urged AstraZeneca shareholders to discuss a merging of the two companies in an equitable transaction. This may be on the horizon as the shares in the British company, which had been sitting at $54.07 before the most recent bid by Pfizer, fell to $42.77 a share, down 11.3 percent, while Pfizer’s shares rose by 1.5 percent in the United States. However, AstraZeneca is not budging from its stance on demands it wants the American company to adhere to.

Commitment to jobs in the United Kingdom, the United States and Sweden is first on the list of requests that the British drug maker wants upheld. AstraZeneca eschews the $119 billion proposition by Pfizer, because of real fears that the American company only wants to use the British company for a tax shelter base. The United Kingdom company has slammed the lack of industry sense at Pfizer’s request and believes the risk to its shareholders is too great.

AstraZeneca also believes that the bid by Pfizer is being driven ahead by the foreseen financial benefits to its corporation, in terms of cost savings and tax shelters that are available in Great Britain but not in the United States. The British company also claims that in the many telephone calls from January of this year to the most recent phone call on Sunday, conversations with Pfizer have come to nothing. They say that in all that time the American company had not made any advances in their value or strategic positions.

The deal that Pfizer is propositioning AstraZeneca with a $119 billion bid, but that the British company has eschewed, is not likely to develop into a hostile takeover offer directly to the shareholders of AstraZeneca. The American company has also stated that they would not be increasing the bid, and that this was their final go at attempting to make a deal with AstraZeneca shareholders, and would only go on and deal directly with the British company’s Board of Directors. However, AstraZeneca’s Board of Directors seems to have the support of its shareholders.

If Pfizer cannot reach an agreed-upon proposition with AstraZeneca, either to the company’s demands for certain standards or more than the eschewed $119 billion, by the May 26, 2014 deadline, then the American company would have to wait six months in order to bring another bid to the British company. In that time, AstraZeneca would have to make evident that it was in the right in rejecting the offer from Pfizer. The fact that the most recent deal plan offered to AstraZeneca was in conjunction with the last offer of five years, and still included the clause that any details in the contract could be modified if there were any significant changes in circumstances, is leading industry experts to believe that the proposed deal will not be going through anytime soon.

Opinion by Korrey Laderoute

Sources:
NYTimes
Reuters
USA Today

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