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Garnry: "Astra Zeneca shareholders blew it"

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AstraZeneca’s stock price tumbled 14 percent on Monday morning after the company rejected Pfizer’s ‘final offer’.

Pfizer valued the company at GBP 55 per share or GBP 69.4 billion. This was too low for AstraZeneca, which had previously stated that its board would only consider an offer of at least GBP 58.85 per share.

The two companies have been caught up in merger negotiations since January. Pfizer originally expressed interest in AstraZeneca, underlying its ambition to create the world’s largest pharmaceutical company. Ian Read, Pfizer’s CEO, has also stated that a merger between the two companies would help reduce labour and tax costs. Concern over large-scale layoffs has created significant opposition against the merger in the UK, where AstraZeneca is based.

Under British law, Pfizer has until May 26th to persuade AstraZeneca to entertain their ‘final offer’; otherwise the company will be prohibited from making another proposal for six months. During which period AstraZeneca would be under enormous pressure from shareholders to prove itself and its decision to reject Pfizer’s latest offer.

Despite the current impasse in negotiations, Pfizer has stated that it would not pursue a hostile offer targeted towards AstraZeneca’s shareholders to secure a deal.

Negotiations Timeline:

25 November, 2013 – Pfizer announces an interest in merging with AstraZeneca

5 January, 2014 – Pfizer and AstraZeneca discuss a merger in New York. Pfizer presents a GBP 55 billion offer, which AstraZeneca rejects

14 January, 2014 – AstraZeneca ends dealings with Pfizer

26 April, 2014 – Pfizer expresses interest in reinitiating merger negotiations

28 April, 2014 – Pfizer acknowledges plans for a second merger offer valuing the company at a significant premium 

2 May, 2014 – Pfizer offers GBP 63 billion, which AstraZeneca promptly rejects

6 May, 2014 – AstraZeneca release a report outlining current drugs in development and the potential for revenue to reach USD 45 billion b 2023

10 May, 2014 – Pfizer CEO, Ian Read publishes a video defending the purposed merger with AstraZeneca. Political opposition against the merger had escalated in Britain over the fear of job cuts and delayed research.

16 May, 2014 – After the market closed, Pfizer sent AstraZeneca another offer valuing the company at GBP 53.50 a share

17 May, 2014 – AstraZeneca’s board meets and formally rejects the latest offer and holds a conference call with Pfizer to discuss the short-comings of the offer

18 May, 2014 – Pfizer revises its bid to GBP 69.4 billion or GBP 55 per share, which AstraZeneca again rejects

26 May, 2014 – Pfizer’s negotiating period ends and must wait six months to renew negotiations