Pfizer confirms second bid for AstraZeneca

Pfizer is poised to kick off the biggest foreign takeover of a British company with a $105 billion (£62 billion) hostile bid battle for AstraZeneca.

Pfizer today went public with its ambitions to buy AstraZeneca.

But AstraZeneca swiftly issued a strongly worded statement rejecting talks and disputing Pfizer’s claim it had made a specific proposal regarding an offer. It said Pfizer’s approach “very significantly undervalued AstraZeneca and its prospects”.

Astra’s board added it had concerns about Pfizer’s proposed structure of the merged company, with Pfizer redomiciling in the UK for tax purposes.

It comes after Viagra maker Pfizer went over the heads of Astra’s board to investors, with a public statement that it had first approached Astra in January, but the UK firm had “declined to pursue negotiations”. Pfizer said it contacted Astra for a second time on Saturday about a bid, but “AstraZeneca again declined to engage”.

City analysts expect a hostile takeover could erupt, sending shares in Astra soaring 15%, or 615p, to 4695p.

“Pfizer is confident a combination is capable of being consummated,” the US drugmaker said.

There are fears on how that would affect British jobs, as AstraZeneca has drawn up plans, but not broken ground, on a £330 million new headquarters and global research centre in Cambridge, employing 2000 people.

If Pfizer moved some of Astra’s production out of the UK it would also hit the nation: the drugmaker produces 3% of Britain’s manufacturing exports, with eight sites employing 7000 staff. One of those, Alderley Park in Cheshire, is in chancellor George Osborne’s constituency.

AstraZeneca has sacked thousands of scientists and other staff as it tries to save money to cope with slipping sales as blockbuster drugs fall out of patent. Pfizer has done the same to cope with its own patent cliff, including closing a major research site in Sandwich, Kent. But Pfizer today tried to allay jobs fears, saying it would combine the two businesses in a new, UK-incorporated holding company. Its head office would be in New York, as would its listing, but management would remain in the UK, Pfizer said.

Its chairman and chief executive Ian Read added: “The UK has created attractive incentives for companies to manufacture products and maintain and protect intellectual property, and we have seen that capital and jobs have followed these types of incentives.”

Pfizer’s first approach was a cash and shares deal worth £58.8 billion but the City said it has “more firepower left”. Jefferies’ pharma analyst Jeffrey Holford said the offer price could value AstraZeneca at $105 billion.

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