LONDON: US drugmaker Pfizer Inc is planning to raise its offer for AstraZeneca Plc as it works with its advisers against the clock in a battle where they have just eight days left to move under British takeover rules.
One person familiar with the matter said news of a better offer than the $106bn rejected by AstraZeneca on May 2 could come today.
Pfizer still hopes to get AstraZeneca into negotiations before the May 26 deadline for making a formal bid or walking away. The two companies have yet to engage and there remains a significant gap in price expectations.
The US group wants to create the world’s largest drugs company, with a headquarters in New York but a tax base in Britain, and would much prefer a recommended deal allowing it access to AstraZeneca’s books. If it is rejected again it might walk away from the situation — triggering a sharp drop in AstraZeneca’s share price — but sources said it had not ruled out a hostile bid. “Going hostile is the least favourite option, but taking the offer direct to shareholders is a possibility,” said one source.
Pfizer’s May 2 cash-and-stock offer was worth £50 a share when it was made, but its value has since slipped to around £48, reflecting a fall in Pfizer’s shares.
It was not clear where the improved offer would be pitched but the gap in pricing the company between the two sides was described as “meaningful” and “significant” by sources, suggesting Pfizer will have to make a sizeable jump in price to around £53 to £55 to secure engagement with its rival. In rejecting Pfizer’s May 2 proposal, AstraZeneca argued that the price undervalued it substantially and the offer also exposed shareholders to significant risks, since 68 percent of the transaction would be in Pfizer shares rather than cash.
Chief Executive Pascal Soriot has laid out details of AstraZeneca’s promising pipeline of new drugs and argues there is “no inevitability” about the Pfizer deal, although he also acknowledges the board would have to consider a compelling bid. Reuters
