AstraZeneca says improved Pfizer bid not possible, even with board backing

AstraZeneca said that Pfizer cannot return with a higher bid for the company, despite the US drugmaker recently indicating that it could if the offer was backed by the UK company's board. AstraZeneca chairman Leif Johansson noted "we have decided that it is necessary to issue a statement to make absolutely clear that Pfizer's final proposal, which the board rejected, is not capable under the [UK] Takeover Panel rules of being increased or even suggested at being increased, privately or publicly, with or without the board's approval or recommendation."

Johansson added "this restriction that prevents further negotiation on value is a consequence of Pfizer's actions." The US drugmaker disclosed its final proposal earlier this week, offering to acquire AstraZeneca for 55 pounds per share ($92.50), or a total of around 69 billion pounds ($116 billion). The bid comprised 24.76 pounds in cash ($41.65) and 1.747 Pfizer shares per AstraZeneca share. At the time, Pfizer also indicated that as previously stated, it would not make a hostile takeover offer.

As such, AstraZeneca noted that "there is no possibility of any proposal at a price higher than set out in Pfizer’s final proposal...being made prior" to the May 26 deadline under UK takeover rules, "even with the consent or recommendation of the board...absent the announcement of a higher competing offer by a third party." Under the rules, Pfizer would be barred from approaching AstraZeneca for six months after the deadline, although the UK company could reopen discussions after three months.

Some shareholders, including Axa Investment Managers, Jupiter Asset Management and Schroder Investment Management, have expressed disappointment with AstraZeneca's quick rejection of Pfizer's offer. The Wall Street Journal reported Wednesday, citing people close to the matter, that Legal & General, which holds a 3.5-percent stake in AstraZeneca, wrote to the company's board urging it to engage in talks with Pfizer. However, analysts at Credit Suisse suggested it "is highly unlikely that shareholder pressure will get AstraZeneca to re-engage," adding "consequently, it is likely that Pfizer's deal will collapse."

Other AstraZeneca shareholders have supported the company's stance on independence. Dominic Ross, chief investment officer of Fidelity, which owns 1.4 percent of AstraZeneca, said the drugmaker "did the right thing" by rejecting the offer, adding "I don’t think that Pfizer was a suitable partner. It was motivated by tax and finance considerations." Meanwhile, Neil Woodford, who manages funds that hold AstraZeneca stock, suggested that the drugmaker will earn better returns for shareholders by staying independent. "I applaud the board’s resolute resistance of the Pfizer approach, based on their long-term value judgment that I fully support," Woodford remarked.

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