Pfizer raises heat on AstraZeneca to open talks over £63bn merger
Tuesday 06 May 2014
Pfizer chief executive Ian Read turned the screw on bid target AstraZeneca yesterday as he attacked its refusal to enter talks with the US pharmaceuticals giant over a $106bn (£63bn) merger.
Mr Read has been wooing Astra’s shareholders and Government ministers over a politically sensitive deal which would mark the biggest ever foreign takeover of a UK company.
He said yesterday Astra’s summary rejection of an improved £50-a-share offer was “very disappointing”, and signalled to shareholders that the US suitor could yet walk away from a deal, saying he was “very confident in our go-forward strategy regardless of a combination”.
The Pfizer boss emphasised the latest offer on the table was more than 20 per cent above Astra’s all-time record share price, representing a return to investors “well in excess of its standalone prospects”.
Mr Read told US analysts: “Up to this point we have only had access to public information on AstraZeneca. Based on what we have learned through that information we believe our revised proposal is compelling and responds to what we have heard from their shareholders.
“We are very disappointed in their unwillingness to engage in conversations and believe it is in the best interests of both companies and AstraZeneca and Pfizer shareholders that we pursue a friendly, negotiated transaction.
“We would like to engage with AstraZeneca to gain a better understanding of their business and prospects.”
AstraZeneca is likely to set out a defence of its prospects and more details on its pipeline of new products this week, although any eventual deal will inevitably be fraught with controversy.
Mr Read has pledged to keep 20 per cent of the combined company’s research and development spending in the UK and press on with Astra’s new Cambridge research base.
However, memories of broken promises following US food giant Kraft’s takeover of Cadbury in 2010 are fresh and Labour leader Ed Miliband has highlighted the “pretty dubious” record of Pfizer in the UK, including the partial closure of its research centre at Sandwich in Kent three years ago with the loss of 1,500 jobs.
Pfizer wants to use the deal to save billions of dollars by moving its tax base to the UK, and also to reclaim the mantle of the world’s biggest pharmaceutical company, which it recently lost to Switzerland’s Novartis.
Mr Read’s comments came alongside disappointing first-quarter results, which sent Pfizer’s shares lower on Wall Street.
Pfizer’s profits were down 15 per cent in the first quarter as generic copies of cholesterol-buster Lipitor – the top-selling drug of all time at its peak – hit the company.
Sales of Viagra – the erectile disfunction drug Pfizer is best-known for in the UK – are also at the mercy of copycat rivals and sales were down 19 per cent on a year earlier. Overall revenues of $11.35bn were 9 per cent down on the year and short of analyst expectations of $12.1bn.
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