This is the third time Pfizer has sweetened its offer. It also increased the ratio of cash AstraZeneca shareholders would receive, from 33% to 45%. The latest offer would give them the equivalent of 55 pounds for each AstraZeneca share, split between 1.747 shares of the new company and 2.476 pence in cash.
Pfizer wants AstraZeneca to accept the bid before a May 26 deadline under United Kingdom takeover rules under which it must make a formal possibly hostile bid or walk away. A mammoth merger of the two pharmaceutical giants could be doomed if the latest advance is rejected, the stories said.
Pfizer -- the maker of erectile dysfunction drug Viagra, among other blockbuster drugs -- first approached AstraZeneca, which makes cholesterol drug Crestor, among others, last year and most recently -- April 28 -- made a cash-and-stock bid of nearly $106 billion to join forces. Despite a 30% run-up in its stock price so far this year based on speculation about the merger, AstraZeneca promptly rejected the bid.
AstraZeneca previously said it concluded that Pfizer proposals "very significantly undervalued" the company "and its prospects."
Pfizer wants to merge with AstraZeneca to form a British-based holding company with management in New York and London. The shares would continue to trade on the New York Exchange here.
AstraZeneca and British government officials have raised concerns about the prospect of job cuts, facility closures and erosion of the science base in the U.K., where London-based AstraZeneca is the second-biggest drug maker, behind GlaxoSmithKline.
Pfizer has made assurances that such cuts would be limited, promising to complete AstraZeneca's research and development hub in Cambridge and to establish the new company's tax residence in England, which would significantly reduce its future tax rate.
But layoffs are inevitable in big mergers, and Pfizer has a record of eliminating tens of thousands of jobs around the world as a result of megadeals.
Ultra-low interest rates have been the catalyst for a number of mergers and acquisitions within the pharmaceutical industry recently. Earlier this year, Swiss drug aker Novartis agreed to swap its vaccine business for GlaxoSmithKline's cancer drug unit and sold its veterinary drug arm to Eli Lilly.
One big driver for joining forces is to cut costs as brutal competition from generic drug makers intensifies. Some of the biggest drug makers are being hit by revenue declines as their blockbuster drugs of recent decades lost patent protection.
On Friday, Pfizer shares rose 4 cents to close at $29.16 and AstraZeneca American depositary shares (ADRs) finished down 28 cents to end at $80.
Source: usatoday.com by Beth Belton, USA TODAY