Pfizer Inc. (NYSE:PFE) confirmed earlier this week that it was trying to bring AstraZeneca plc (ADR) (NYSE:AZN) (LON:AZN) back to the negotiating table after its previous attempt to buy the company fell through this past January. The proposal reportedly valued AstraZeneca at $100 million, roughly its current market cap, but it would have relocated AstraZeneca to the UK for tax purposes and contained the same mix of cash/shares, both provisions that the AstraZeneca board objected to last time.
“The financial and other terms described in the Proposal are inadequate, substantially undervalue AstraZeneca and are not a basis on which to engage with Pfizer,” AstraZeneca wrote in a press release this morning. “The Board has rejected the Proposal.”
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In January, Pfizer Inc. (NYSE:PFE) offered to buy AstraZeneca plc (ADR) (NYSE:AZN) (LON:AZN) for what amounts to $76.62 per share with a combination of 30% cash and 70% shares in Pfizer, then a significant premium to AstraZeneca’s share price. Both the January bid and Pfizer’s recent overture pushed AstraZeneca’s share price up, closing yesterday at $81.09. It’s not yet clear if investors expected AstraZeneca to take the deal and were trying to cash in, or if it caused them to re-examine the company’s value.
“AstraZeneca continues to invest significantly in research, development and manufacturing in the U.K., Sweden and the US,” said AstraZeneca plc (ADR) (NYSE:AZN) (LON:AZN) chairman Leif Johansson in a statement. “We are showing strong momentum as an independent company, in particular with our exciting, rapidly progressing pipeline, which the Board believes will deliver significant value for shareholders. Pfizer’s proposal would dramatically dilute AstraZeneca shareholders’ exposure to our unique pipeline and would create risks around its delivery. As such, the Board has no hesitation in rejecting the Proposal.”
There has been some speculation that a failed Pfizer Inc. (NYSE:PFE) bid might bring offers from other companies, but the AstraZeneca plc (ADR) (NYSE:AZN) (LON:AZN) announcement advised shareholders to take no action, as there is no guarantee that another offer will be forthcoming or that its terms might be attractive enough to take.
The rejection goes against a recent jump in pharma M&A activity, including Valeant Pharmaceuticals Intl Inc (NYSE:VRX) $46 billion bid for Allergan, Inc. (NYSE:AGN) and a series of deals between Novartis AG (ADR) (NYSE:NVS), GlaxoSmithKline plc (ADR) (NYSE:GSK) (LON:GSK) and Eli Lilly and Co (NYSE:LLY).