The board of directors of AstraZeneca plc (ADR) (NYSE:AZN) (LON:AZN) rejected the final takeover proposal from Pfizer Inc. (NYSE:PFE), citing the reason that $119 billion falls short of its value as an independent science-led company.
Pfizer Inc. (NYSE:PFE)’s final takeover bid for the Anglo-Swedish pharmaceutical company is composed of £24.76 in cash (45%) and 1.747 Pfizer shares (55%) per AstraZeneca share, representing a value of £55.00 per AstraZeneca share. According to AstraZeneca plc (ADR) (NYSE:AZN) (LON:AZN)’s board of directors, the offer “undervalues the company and its attractive prospects.”
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In a statement, AstraZeneca Chairman Leif 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 minimization. From our first meeting in January to our latest discussion yesterday, and in the numerous phone calls in between, Pfizer has failed to make a compelling strategic, business or value case. The Board is firm in its conviction as to the appropriate terms to recommend to shareholders.”
Johansson added that the entire value of AstraZeneca plc (ADR) (NYSE:AZN) (LON:AZN)’s pipeline will accrue to its shareholders as an independent company, and the final amount proposed by Pfizer Inc. (NYSE:PFE) would be “significantly diluted.”
“We have rejected Pfizer’s final proposal because it is inadequate and would present significant risks for shareholders, while also having serious consequences for the Company, our employees and the life-sciences sector in the U.K., Sweden and the U.S.,” explained Johansson.
Board confident on AstraZeneca’s long-term revenue targets
AstraZeneca plc (ADR) (NYSE:AZN) (LON:AZN)’s board of directors emphasized that the company’s momentum in all aspects of its strategy remained strong as proven by its recent multiple pipeline developments in its core therapy areas. The board is confident about the company’s long-term revenue targets and profitability.
In a note to investors, Credit Suisse analyst Vamil Divan, MD and his colleagues commented that the bid is now in the hands of shareholders. They also opined that even if Pfizer Inc. (NYSE:PFE) indicated that it will not raise its offer in aggregate, it reserve the right to “introduce other forms of consideration and / or vary the mix of consideration.”
Divan and his team believed that a “further cash element would be possible and still meet the conditions of no increase in the overall price and meet the U.S. tax inversion rules.”