British drugmaker AstraZeneca on Monday rejected a “final” $117-billion takeover bid from US rival Pfizer, appearing to put an end to a deal that would have created a sector giant.
Pfizer lodged a fourth and final offer worth 85 billion euros or £69 billion on Sunday, pitched at £55 per share, and said it would not proceed without a recommendation from management.
“The fate of the deal is now up to AstraZeneca’s shareholders. We believe our final proposal represents compelling and full value for AstraZeneca shareholders,†Pfizer said in a statement on Monday.
With prospects of a deal dying fast, AstraZeneca’s share price tumbled by as much as 15 percent in Monday trades.
It later pulled back to stand at £42.90, down 11 percent from Friday’s close. London’s FTSE 100 index was 0.12-percent lower at 6,847.79 points.
The US giant’s bid was aimed at strengthening its research in cancer and slashing its tax bill. But opponents argued that jobs might have been cut in Britain and vital research eventually scaled back in the takeover occurred.
“We have rejected Pfizer’s final proposal because it is inadequate and would present significant risks for shareholders, while also having serious consequences for the company, our employees and the life-sciences sector in the UK, Sweden and the US,” said AstraZeneca chairman Leif Johansson.
– Deal ‘motivated by tax’ –
He also attacked Pfizer’s controversial plan to re-domicile the combined company in Britain for tax purposes, in a move that would help it avoid paying billions of dollars in tax to the US government.
“Pfizer’s approach throughout its pursuit of AstraZeneca appears to have been fundamentally driven by the corporate financial benefits to its shareholders of cost savings and tax minimisation,” added Johansson.
Pfizer has stated that the combined company would deliver an expanded product pipeline, deep potential cost cuts and significant tax savings from making Britain its home base for tax purposes.
“From our first meeting in January to our latest discussion yesterday, and in the numerous phone calls in between, Pfizer has failed to make a compelling strategic, business or value case,” Johansson said.
Asked when the Pfizer takeover saga would be over, Johansson told BBC radio: “I have no idea.”
He added: “This has been going on for quite some time and we have been in very deep engagement over the whole of the weekend, if Pfizer now says this is the final offer I have to believe what they say.”
Pfizer’s tilt at AstraZeneca comes as global pharmaceutical giants manoeuvre over deals worth billions of dollars to cope with lost revenues from public sector cutbacks in health care, and patent expirations.
“I would be surprised if the AstraZeneca board had turned down Pfizer’s offer without first taking the temperature of their major shareholders,” said Michael Hewson, analyst at trading group CMC Markets.
“Whether it ends Pfizer’s pursuit is open to question but it makes a quick deal much less likely.”
Pfizer had stated on Sunday that its latest offer was the “final” approach, adding that it would not go hostile.
– Latest bid ‘falls short’ –
On Friday, Pfizer had proposed to pay £53.50 per share, up from the previous level of £50 which was offered in on May 2.
However, AstraZeneca responded that it would recommend an offer only of more than 10 percent above the £53.50 level, indicating a price of £58.85 per share or £74.3 billion. The subsequent offer, delivered on Sunday, fell short of this level.
“The final proposal is a minor improvement which continues to fall short of the board’s view of value and has been rejected,” said Johansson.
“As an independent company, the entire value of AstraZeneca’s (drugs) pipeline will accrue to our shareholders. Under Pfizer’s final proposal, this value would be significantly diluted,” he added.
Under the latest bid, Pfizer shareholders would own approximately 73 percent of the new firm, with the rest held by those of the British group.
Politicians and unions had expressed concern that a tie-up could lead to job cuts and damage Britain’s position as a research and development hub.