Bloomberg News

Pfizer Planning to Raise AstraZeneca Bid Above $106 Billion

May 01, 2014

Pfizer Headquarters

Pfizer's headquarters in New York. Photographer: Timothy A. Clary/AFP via Getty Images

Pfizer Inc. (PFE:US) is preparing to sweeten its bid for AstraZeneca Plc to more than 63 billion pounds ($106 billion) in an attempt to lure the U.K.’s second-biggest drugmaker to the negotiating table, people with knowledge of the matter said.

The offer may value AstraZeneca at more than 50 pounds a share and include a larger cash component, and could come as early as next week, said the people, who asked not to be identified discussing confidential information. The London-based company rejected a cash-and-stock proposal of 46.61 pounds a share. Pfizer will report its earnings on May 5.

The new bid and its timing aren’t final and may change, two of the people said. After speaking with some AstraZeneca shareholders, Pfizer sees an offer in the low 50 pound-per-share range gaining their support for the companies to hold talks, two people said.

Pfizer’s Chief Executive Officer Ian Read is on a charm offensive in the U.K. this week and would prefer to negotiate a friendly deal. Buying AstraZeneca would give Pfizer a lower tax rate and a portfolio of experimental cancer drugs.

AstraZeneca rose 3.2 percent to 4,815 pence a share in London today, giving it a market value of 60.8 billion pounds. Pfizer fell 0.4 percent to $31.15.

The companies have several large investors in common, including BlackRock Inc., Wellington Management Co. and Vanguard Group Inc. Pfizer’s top-20 shareholders collectively own 27.6 percent of AstraZeneca, Bloomberg data show.

Government Meetings

“Until we see something officially, there is no comment we can provide,” said Esra Erkal-Paler, an AstraZeneca spokeswoman. Pfizer spokeswoman Joan Campion declined to comment.

Pfizer’s earlier offer, made in January, valued AstraZeneca at 58.8 billion pounds. The proposed deal would be the largest ever in the drug industry and the biggest of a U.K. company, data compiled by Bloomberg show.

Read met with U.K. government ministers April 29 to discuss a potential takeover, according to a person familiar with the meetings. The CEO emphasized the American company’s plans to carry out research, development and manufacturing in the U.K. as well as the appeal of the British tax system, the person said.

Global Company

British lawmakers this week mobilized against Pfizer’s attempt, demanding Business Secretary Vince Cable secure assurances on jobs and research investment. Part of Pfizer’s pitch to British skeptical officials and media is that AstraZeneca is a global company and has substantial operations and people outside the country, said one of the people.

About 40 percent of AstraZeneca’s revenue in 2013 came from North America, and another 34 percent from outside of Europe, data compiled by Bloomberg show.

AstraZeneca Chairman Leif Johansson said the drugmaker will return to growth as an independent company and listed the reasons for rejecting the Pfizer offer, in a video today. The bid “significantly undervalued” the company and it’s concerned that the offer was too heavily weighted in stock.

Pfizer’s pursuit of AstraZeneca is eclipsing a deal announced April 22 by Novartis AG of Basel, Switzerland, and GlaxoSmithKline Plc. Novartis agreed to buy Glaxo’s cancer business for as much as $16 billion, form a consumer-health joint venture with Glaxo, sell its veterinary unit to Eli Lilly & Co. for $5.4 billion and sell most of its vaccines business to Glaxo for as much as $7.1 billion.

To contact the reporters on this story: Manuel Baigorri in London at mbaigorri@bloomberg.net; David Welch in New York at dwelch12@bloomberg.net; Drew Armstrong in New York at darmstrong17@bloomberg.net

To contact the editors responsible for this story: Aaron Kirchfeld at akirchfeld@bloomberg.net; Mohammed Hadi at mhadi1@bloomberg.net Mohammed Hadi


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Companies Mentioned

  • PFE
    (Pfizer Inc)
    • $30.4 USD
    • -0.18
    • -0.59%
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