Pfizer to sweeten bid pill with £67bn offer
US drugs giant races to beat deadline with £55-a-share deal
AMERICAN pharmaceutical giant Pfizer is understood to be putting the final touches to an improved bid for AstraZeneca this weekend which is expected to value the British drugs giant at £67billion.
Under City rules, Pfizer has eight days left to make an improved offer or go hostile by approaching shareholders directly. But insiders say they expect Pfizer to move quicker with an enhanced deal in the hope of luring AstraZeneca’s chief executive Pascal Soriot to the negotiating table.
The AstraZeneca board has already rejected Pfizer’s £50-a-share offer, which valued it at £63billion. Shareholders are understood to be demanding at least £53 a share, which at current prices would be worth about £67billion.
But some observers have said Pfizer could offer as much as £70billion, or £55 a share.
The offer – which could herald the biggest ever takeover of a British company by a foreign buyer – is also expected to include more hard cash, following earlier deals that were mainly in Pfizer shares.
Even an agreed deal could take months to complete and Labour’s shadow Business Secretary, Chuka Umunna, has warned that if Labour is elected in 2015 it will block the takeover.
The expected offer comes amid growing political unease over the deal, both from British MPs who quizzed both Pfizer and AstraZeneca bosses last week but also politicians in America and Sweden, where AstraZeneca has significant operations.
Speculators, thought to be dominated by hedge funds, have taken sizeable bets against the takeover going ahead, with investments worth about £3.8billion staked on AstraZeneca’s shares price falling.
While shareholders might be tempted to accept a higher offer, the company’s advisers are keen to stress that even if the cash element is increased, the bulk of the payments will still be in Pfizer shares, meaning investors should consider the future performance
of the merged company. The board at AstraZeneca stand to make huge profits on their investment if a deal is agreed. Soriot’s stake in AstraZeneca, along with shares he could receive under various bonus schemes, could be worth £31.5 million if Pfizer raises its bid to £55. Soriot insists he is not motivated by the money and that many of the shares he holds were bought with his own cash.
Staff are also given the chance to buy AstraZeneca shares through an employee share scheme and could also profit from a successful bid.
Both sides are gearing themselves up for a final push after in week in which executives from two companies faced questioning from MPs on two influential Parliamentary select committees who were keen to find out how jobs and drugs projects would be affected.
Pfizer chief Ian Read refused to give MPs a figure on job losses last week, but he has pledged to keep 20 per cent of Pfizer’s research and development in Britain for at least five years.