Last week I wrote about the recent mergers and acquisitions (M&A) activity witnessed in the pharmaceutical sector. While the GlaxoSmithKline deal with Novartis has been agreed and both companies are working through the mechanics of the deal, the bid from US-based Pfizer for AstraZeneca rumbles on.
The latest bid from Pfizer values the company at £63.1bn, or approximately £50 per share. This represents 32% premium to the closing price of £37.82 on April 17, the last day trading day before reports of the bid. However the AstraZeneca board have rejected this offer and urged shareholders that this undervalues the pipeline business. This is the second bid to be rejected after AstraZeneca turned down an informal bid of £46.61 per share. Pfizer still have the option of mounting a hostile takeover, and could go directly to the AstraZeneca shareholders, although the company has made it clear they would rather negotiate a deal with AstraZeneca’s board.
There is, however, plenty of political resistance from both sides of the Atlantic. From a UK perspective the concern is that Pfizer would want to squeeze savings out of the significant research operations AstraZeneca has based in the UK. Therefore it is not surprising that a number of politicians and senior figures have shown interest and concerns over this potential deal. In an open letter to David Cameron, Pfizer makes a number of commitments to keep a large presence in the UK, however there are no commitments on jobs. AstraZeneca currently employs 6,700 people in the UK and there have been talks between senior politicians and Pfizer to ensure British jobs are protected.
_____________________________________