Britain’s highest-profile fund manager, Neil Woodford, has begun building a stake in AstraZeneca in a move that could scupper rival Pfizer’s chances of buying the pharmaceutical giant later this year.
AstraZeneca rejected a £69bn bid from the maker of Viagra in May, even though some of its largest institutional shareholders wanted it to open talks.
Mr Woodford, who quit Invesco Perpetual to launch Woodford Investment Management last year, spoke out against the deal at the time and has since spent 8.3 per cent of the £1.6bn he recently raised from investors to buy a holding in the drugs company.
Although the stake is small, less than 1 per cent, it is still significant because Mr Woodford has built a reputation as an activist investor who builds large, long-term holdings in the companies he invests in. He played a vocal role in blocking the merger of the defence giant BAE Systems to its European rival EADS in 2012, arguing at the time that the enlarged company would become a “puppet” of the French government.
He also invests in AstraZeneca through the £3.5bn he controls on behalf of the FTSE 100 wealth manager St James’s Place.
Takeover rules in the UK mean that although AstraZeneca can reach out to Pfizer from next month, Pfizer cannot make an unsolicited bid until November. If it does, the US company is likely to encounter significant hurdles, with politicians wading into the topic in May amid fears that jobs in the UK could be lost.
The rest of the money in Mr Woodford’s latest £1.6bn fund was invested in other London-listed companies, including 7.11 per cent on GlaxoSmithKline, 6.2 per cent on British American Tobacco, and 6 per cent on BT.
Mr Woodford said: “The global economy and financial markets both face a tricky time over the next few years, but there are still many undervalued assets in equity markets and it is these opportunities that the fund is seeking to exploit.
“I have been very careful in building a portfolio that avoids sectors that I believe are vulnerable to a faltering global economy. There is significant emphasis in my new fund on the tobacco and pharmaceutical sectors. These two sectors are resilient to falling demand, have strong balance sheets and attractive valuations.”
Woodford Investment Management has said it plans to disclose the make-up of its entire portfolio on a monthly basis to be “open and transparent” with its investors.Reuse content