LONDON (AP) — The board of AstraZeneca on Monday rejected the improved $119 billion takeover offer from U.S. drugmaker Pfizer, a decision that caused a sharp slide in the U.K. company's share price as many investors think it effectively brings an end to the protracted and increasingly bitter takeover saga.
The board said in a statement that it "reiterates its confidence in AstraZeneca's ability to deliver on its prospects as an independent, science led business."
Pfizer, which is the world's second-biggest drugmaker by revenue, has been courting No. 8 AstraZeneca since January, arguing their businesses are complementary. On Sunday, it raised its stock-and-cash offer by 15 percent to $118.8 billion, or 70.73 billion pounds. That would be the richest acquisition ever among drugmakers and the third-biggest in any industry, according to figures from research firm Dealogic.
AstraZeneca didn't take long to reject the new offer, its board arguing Pfizer is making "an opportunistic attempt to acquire a transformed AstraZeneca, without reflecting the value of its exciting pipeline" of experimental drugs.
Because Pfizer said it won't raise its offer again or launch a hostile takeover bid over the heads of AstraZeneca's board, the prospect of a deal looks increasingly remote unless AstraZeneca shareholders urge a change of mind. Pfizer has said it hopes AstraZeneca's shareholders will push for a deal.
"This has been going on for quite some time and we have been in very deep engagement over the whole of the weekend," AstraZeneca Chairman Leif Johansson told the BBC. "If Pfizer now says this is the final offer I have to believe what they say."
Shareholders in AstraZeneca PLC seemed to think a deal is now unlikely, with the company's share price slumping 11.1 percent to 42.87 pounds.
Johansson said his management team had told Pfizer Inc. over the weekend that it would need to see a 10 percent improvement over the 53.50 pounds-per-share offer that was on the table at that time. He said Pfizer's latest offer represented only a "minor improvement" that fell short of the 10 percent needed.
Though it has said its indicative offer is final, Pfizer has, under U.K. takeover rules, until 5 p.m. local time on May 26 to make a formal bid. If it doesn't, it cannot make another offer for six months.
Pfizer's offer comes amid a surge of other deals as drugmakers look to either grow or eliminate noncore assets to focus on their strengths. Those deals include Switzerland's Novartis AG agreeing to buy GlaxoSmithKline's cancer-drug business for up to $16 billion, to sell most of its vaccines business to GSK for $7.1 billion, plus royalties, and to sell its animal health division to Eli Lilly and Co. of Indianapolis for about $5.4 billion. Canada's Valeant Pharmaceuticals has also made an unsolicited offer of nearly $46 billion for Botox maker Allergan, which has turned it down, so far.
Pfizer's latest offer increased the ratio of cash AstraZeneca shareholders would receive, from 33 percent to 45 percent. The latest offer would give them the equivalent of 55 pounds for each AstraZeneca share, split between 1.747 shares of the new company and 2.476 pence in cash. It said the offer represents a 45 percent premium to AstraZeneca's share price of 37.82 pounds on April 17, before rumors of the deal began circulating.
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