AstraZeneca is not for turning. It has rejected Pfizer again, and seemingly for the last time.
The US pharma giant suddenly came forward with a “final offer” of £55 a share yesterday, valuing AstraZeneca at £69.3bn in a cash-and-shares deal.
Pfizer’s shares have taken a 14% hit since the news broke.
It’s the fourth offer Pfizer has made, and the second in this weekend alone, as AstraZeneca also this weekend turned down the £53.50-a-share offer Pfizer made on Friday.
So why did AstraZeneca say no?
1. Not enough money
AstraZeneca believes that the £69.3bn offer is still too low. Over the weekend, it told Pfizer it wanted at least £58.85 per share (compared with the £55 just offered).
Chairman Leif Johansson said Pfizer’s bid undervalues the company.
He said in a statement: “This proposal undervalues the company and its attractive prospects and has been rejected by the Board of AstraZeneca. […]
“As an independent company, the entire value of AstraZeneca’s pipeline will accrue to our shareholders. Under Pfizer’s Final Proposal, this value would be significantly diluted.”
2. Suspicions over Pfizer’s motives
There’s been plenty in the press about Pfizer wanting to use AstraZeneca to minimise its tax bill – not least because execs at Pfizer have said as much themselves.
Johansson said: “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.”
He said that “Pfizer has failed to make a compelling strategic, business or value case”.
3. The acquisition process itself
Johansson, talking to Sky News, said one of the key reasons his company was rejecting Pfizer’s bid was because “there is a long, drawn-out process, with very considerable execution risk”.
After rejecting four offers, it looks like that process is just not going to be worth it for the UK drugs company any more.
4. Maintaining innovation
He also said: “We think there is a clearly disruptive element in how we can best create value for shareholders and society by disrupting the way we get medicines to the market.”
AstraZeneca wants to protect the innovation is has cultivated, and use that to exploit future opportunities.
Johansson said in his statement: “AstraZeneca has created a culture of innovation, with science at the heart of its operations, which will continue to create significant value for patients, shareholders and all stakeholders of AstraZeneca.”
The company is ready to fight, and with plans to reach more than $45bn turnover by 2023 and its evident feistiness, the future pharma fight between the UK vs US drugs giants is sure to be one worth watching.