Is Blackrock Going “Activist” With AstraZeneca?

BlackrockBy BlackRock [Public domain], via Wikimedia Commons

Is the activist strategy spreading to traditional establishment investors such as BlackRock, Inc. (NYSE:BLK)?

Blackrock communicating its desires to AstraZeneca

BlackRock, Inc. (NYSE:BLK), the epitome of establishment institutional investing, may be finding its voice.  The New York Times is reporting that BlackRock, AstraZeneca plc (ADR) (NYSE:AZN) (LON:AZN)’s largest shareholder, is making public its desire for the drug maker to renew talks with Pfizer Inc. (NYSE:PFE) about a potential deal.

Typically conservative institutional investors seldom, if ever, speak against management decisions in the companies in which they were invested. BlackRock, Inc. (NYSE:BLK)’s, which is an 8% owner in AstraZeneca plc (ADR) (NYSE:AZN) (LON:AZN), has displayed an attitude on the topic could mark a shift towards the activist side of the scale.

Its good to reject someone in the relationship game, just make sure you can get them back

BlackRock, Inc. (NYSE:BLK) has communicated to the AstraZeneca plc (ADR) (NYSE:AZN) (LON:AZN)’s board that while it supports the company’s decision not to accept Pfizer Inc. (NYSE:PFE)’s current $119 billion offer, the company should not sit on its hands but rather should engage Pfizer to generate a higher offer.  British takeover rules, which govern AstraZeneca, state that Pfizer has until Monday to make decisions on proceeding or walking away from the deal.

Pfizer not going to peruse if attention is unwanted

The ball could be in AstraZeneca plc (ADR) (NYSE:AZN) (LON:AZN)’s court, as Pfizer Inc. (NYSE:PFE) has said it won’t go the hostile takeover route.  Either AstraZeneca wants a takeover, which often pushes top management at the firm out of their positions of power, or the company does nothing and the deal is dead on Tuesday.

Quoting an unnamed source, the Times article said BlackRock, Inc. (NYSE:BLK)’s desire is they reach out to Pfizer and engage in discussions.  The source indicated that serious relationship talks could take place in three months, when takeover rules expire.

While Blackrock has officially refused to comment, Britian’s Sky News reported the Blackrock talks with AstraZeneca plc (ADR) (NYSE:AZN) (LON:AZN) on Thursday.

AstraZeneca and Pfizer and close in negotiations on the London-based company’s price. Pfizer Inc. (NYSE:PFE) valued AstraZeneca at £55, which converts to near $92.80 per share.  This offer is comprised of $41.65 in cash and the balance in Pfizer stock.  AstraZeneca had said it was comfortable with valuations near £58, according to the report.

The stock is down over 2% today, trading at $72, on near average volume.

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About the Author

Mark Melin
Mark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)valuewalk.com

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