Pfizer pursues potential merger with AstraZeneca

Published: 28-Apr-2014

AstraZeneca has so far \'declined to engage\' in a possible deal


US drugmaker Pfizer says it intends to make an offer for its smaller Anglo-Swedish rival AstraZeneca.

The company says it initially approached AstraZeneca in January this year regarding a possible merger, but 'after limited high level discussions' the company says AstraZeneca 'declined to pursue negotiations'.

Pfizer says it contacted AstraZeneca again on 26 April and AstraZeneca 'again declined to engage'.

The US company says it is 'currently considering its options' with respect to AstraZeneca.

Pfizer’s original proposal, made to the board of AstraZeneca on 5 January, included a combination of cash and shares and would have valued AstraZeneca's shares at £46.61 ($76.62) each – a premium of around 30% at the time.

Shares in AstraZeneca jumped by 15% this morning (28 April) after Pfizer confirmed its interest in a takeover.

Pfizer says it is now considering a possible transaction in which AstraZeneca shareholders would again receive a significant premium for their shares.

The company says the deal would be a 'highly compelling opportunity' for AstraZeneca shareholders.

We believe patients all over the globe would benefit from our shared commitment to R&D

Pfizer says if the deal goes through the combined company would have management in both the US and the UK.

'We have great respect for AstraZeneca and its proud heritage as an innovation-driven biopharmaceutical business with a rich science-based foundation in both the UK and Sweden,' said Ian Read, Chairman and CEO of Pfizer.

He added: 'We believe patients all over the globe would benefit from our shared commitment to R&D, which is critical to the future success of the pharmaceutical industry, in the form of potential new therapies that help to fight some of the world’s most feared diseases, such as cancer.'

Pfizer has a long track record of making major acquisitions, with the $68bn purchase of Wyeth in 2009 its last major deal, after earlier acquisitions of Pharmacia and Warner Lambert.

The US company believes the possible combination of the two companies would create a 'highly complementary mapping of products, pipeline and operating assets to Pfizer’s new operating structure, providing additional critical mass to all business segments and strong cash flow through'.

Pfizer says synergies would be achieved through the combination of the two companies’ operations and that the combination would enable 'greater capital efficiency and a more efficient tax structure'.

The merged company would operate 'under a new UK-incorporated holding company [that] would not subject AstraZeneca’s non-US profits to US tax, which would be in the best interests of the combined company’s shareholders', Pfizer says.

No comment has been received from AstraZeneca as yet.

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