Pfizer sweetens AstraZeneca takeover bid to $106 bn

Pfizer raised its blockbuster takeover bid for Britain`s AstraZeneca on Friday to USD 106 billion as the US drugs giant seeks to strengthen its research in cancer and cut its tax bill.

AFP| Last Updated: May 02, 2014, 16:33 PM IST

London: Pfizer raised its blockbuster takeover bid for Britain`s AstraZeneca on Friday to USD 106 billion as the US drugs giant seeks to strengthen its research in cancer and cut its tax bill.

The Viagra maker has lifted its informal takeover offer to the equivalent of 76 billion euros, or £50 per AstraZeneca share, it said in a statement.

That compared with the previous proposal of £46.61 which was worth about USD 99 billion.

The tie-up between two of the world`s biggest pharmaceutical firms is aimed at combining research in oncology and other key disciplines, while the new group`s corporate and tax residence will be in England.

"Pfizer Inc. today announces that, having consulted with major shareholders, it has submitted a revised written proposal to AstraZeneca PLC to make an offer to combine the two companies," it said in a statement to the London Stock Exchange.

"Pfizer hopes that the increased proposal will provide the basis for AstraZeneca to engage with Pfizer and enter into discussions relating to a possible combination of the two companies."

In response, the London-listed drugs giant noted the revised proposal, adding in a brief statement that its board will meet to discuss the offer.

The prior bid, made in January but disclosed earlier this week on Tuesday, was rejected by AstraZeneca on the grounds that it "significantly undervalued" the firm.

Under the latest offer, AstraZeneca investors would receive 1.845 shares in the new combined company and 1,598 pence in cash, valuing the British group at approximately £63 billion.

"We have seen significant positive market reaction to the announcement we made on April 28, including from the shareholders of both our companies," added Pfizer chief executive Ian Read.

"The consistent message we have heard reinforces our belief that there is a highly compelling strategic, business and financial rationale for combining our businesses, with significant benefits for shareholders and stakeholders of both companies.

"We believe our proposal is responsive to the views of AstraZeneca shareholders and provides a sound basis upon which to arrive at recommendable terms for the combination of our two companies."

In Friday morning deals, AstraZeneca shares dipped 0.96 percent to £47.69, having already rallied since Tuesday on anticipation of an improved bid.

Pfizer`s tilt at AstraZeneca comes as global pharmaceutical giants undertake billions of dollars in deals to cope with lost revenues from patent expirations and the effects of public cuts on health care spending.

The US titan has already highlighted considerable tax advantages from the transaction, which would create a new UK-incorporated holding company.Pfizer also wrote to British Prime Minister David Cameron on Friday to say it would complete AstraZeneca`s proposed research and development facility in Cambridge, adding that 20 percent of the new group`s R&D staff would be based in Britain.

"A combined company would bring together powerful and world leading research expertise in key therapeutic areas such as oncology, inflammation, and cardiovascular and metabolic disorders," Read added in the letter to Cameron.

He added that the "world class academic research resources in the `golden triangle` of Oxford, Cambridge and London would represent a vital component, along with the positive environment for inward investment that the UK government has created".

"Ultimately, establishing the world`s largest research-based pharmaceutical company in the UK, together with the commitments made in this letter represent a strong indicator of the incentives that your government has created to attract successful business to the UK."

The bid for AstraZeneca follows other mega-mergers undertaken by Pfizer, the biggest US drugmaker by revenue. Prior Pfizer takeovers included Warner-Lambert, Pharmacia and Wyeth.