AstraZeneca has rejected a second and improved £62.8 billion takeover offer from Pfizer with "no hesitation".
Although Pfizer's assurances on investment helped to soothe political concerns over the £50-per-share bid, the AstraZeneca board deemed the offer, up 7 per cent from the original £46.61 move, still too low.
AstraZeneca’s decision came after a hastily convened board meeting in London this morning. The company said too much of Pfizer’s offer consisted of shares rather than cash, and criticised the fact that the Viagra maker’s rationale for the deal was based upon tax savings.
Pfizer’s chief executive Ian Read had attempted to soothe political concerns about the impact on Britain’s skilled workforce in a letter to the Prime Minister.
He also piled the pressure on Astra’s board to set up discussions, with the clipped comment: “Although we would have liked more time to meet privately to discuss our latest proposal, I believe that our revised terms are sufficient for you to agree to meet with us.”
Prior to the rejection, one top-10 investor told The Independent's sister paper, the London Evening Standard: “This is a serious enough offer for both companies to sit down and start talking. We’d be disappointed if the AstraZeneca board rebuffed this although the price will probably need to be higher. It’s a complex deal and it’s far from being done, we won’t make a decision until we see more details.”
Read told David Cameron of the virtues of “the “golden triangle” of Oxford, Cambridge and London, and pledged to complete AstraZeneca’s planned £300 million Cambridge campus, which has not yet broken ground, as well as employing at least a fifth of the combined company’s total reasearch and development (R&D) workforce in the UK.
Science minister David Willetts told the Evening Standard these assurances showed the success of the Government’s “hard-nosed and muscular” talks with the US company. “This letter is a result of those very clear messages from the British Government,” Willetts said, acknowledging, however, that many in the science community remain deeply concerned about the deal.
Pfizer spent only about 10 per cent of its revenues last year on R&D versus Astra’s 16 per cent spend and its record of takeovers is one of heavy job cuts.
Today Pfizer committed itself to offering at least two AstraZeneca board members a place on the new firm’s non-executive committee. It also agreed to hold board meetings in the UK and to “participate meaningfully in the UK”.
In today’s bid, the cash element has been raised to 32 per cent from 30 per cent. UBS told clients this should be seen as Pfizer’s “starting point”, and the cash part was too low.