Britain's AstraZeneca on Monday rejected a sweetened and "final" offer from Pfizer , undermining the US drugmaker's plan for a merger to create the world's biggest pharmaceuticals group. The rebuff came nine hours after Pfizer said on Sunday it had raised its take-over offer to 55 pounds a share, or around 70 billion pounds ($118 billion) in total, and would walk away if AstraZeneca did not accept it.
The rejection left some major shareholders fuming as shares in AstraZeneca slumped 11 percent, trading at 43 pounds at 1445 GMT after falling as much as 15 percent - their biggest ever intra-day decline. Pfizer climbed 1.5 percent in New York. AstraZeneca Chairman Leif Johansson told Reuters he now saw no prospect of a deal with Pfizer before a deadline of May 26 set under British take-over rules, or any likelihood of that deadline being extended.
Pfizer wants to create the world's largest drugs firm, with a headquarters in New York but a tax base in Britain, where corporate tax rates are lower than in the United States. The plan has met entrenched opposition from AstraZeneca, as well as politicians and scientists who fear cuts to jobs and research.
"It died of multiple wounds. Too little cash, too many suspicions about Pfizer's motives, and too little confidence in its assurances about jobs," said Erik Gordon, professor at the University of Michigan's Ross School of Business. "Pfizer's chances are going down, despite its offer of a higher price."
Johansson said he had made clear in discussions with Pfizer that his board could only recommend a bid that was at least 10 percent above an offer of 53.50 pounds made by Pfizer on Friday, or 58.85 pounds. He blamed Pfizer for calling a halt to discussions after a telephone call lasting more than an hour with Pfizer's chairman and CEO Ian Read on Sunday afternoon.
In addition to the inadequate price, Johansson also slammed the lack industrial logic behind Pfizer's move; the risks posed to shareholders by the controversial tax plans; and the threat to life science jobs in Britain, Sweden and the United States. "Pfizer's approach throughout its pursuit of AstraZeneca appears to have been fundamentally driven by the corporate financial benefits to its shareholders of cost savings and tax minimisation," Johansson said in a statement.
But many of Johansson's shareholders were deeply unimpressed. "We do not think the Astra management have done a good job on behalf of shareholders," said one fund manager at a top-10 investor in the group. Alastair Gunn of top-30 shareholder Jupiter Fund Management said: "We are disappointed the board of AstraZeneca has rejected Pfizer's latest offer so categorically. They should have at least engaged in a constructive conversation with Pfizer." However, Pfizer's proposed take-over, which would be the largest-ever foreign acquisition of a British company, is opposed by many scientists and politicians who fear it would undermine Britain's science base.