Pfizer Walks Away From $120bn AstraZeneca Deal


Monday, May 26, 2014 3.50PM / By Geoffrey Rogow and Hester Plumridge; WSJ





Pfizer officially walked away from its offer to purchase AstraZeneca for $120 billion, putting an end to a month-long pursuit that would have tied up the trans-Atlantic pharmaceutical giants.


In a statement, Pfizer said it doesn't intend to make another offer for AstraZeneca.


"We continue to believe that our final proposal was compelling and represented full value for AstraZeneca based on the information that was available to us," said Ian Reid, chairman and chief executive of Pfizer.


The decision to move on from Pfizer comes slightly more than a week after Pfizer made a final offer for AstraZeneca valued at roughly $120 billion, or £55 ($92.48) a share with a 45% cash component. The latest offer of £55 was above Pfizer's initial £53.50 offer, but below the £58.85 a share AstraZeneca had said would be needed to secure the board's recommendation.


That increased offer, which came four weeks from the confirmation of Pfizer's first offer, was promptly rejected by AstraZeneca. Even so, U.K. takeover rules gave the firms until Monday to enter takeover discussions.


The views of AstraZeneca shareholders are polarized with some saying AstraZeneca can deliver better value through investing in and delivering its own pipeline of cancer, respiratory and diabetes drugs. Others say the 7% difference between the rejected £55-a-share offer and the £58.85 AstraZeneca publicly cited as its lower limit for considering a deal should have been the basis for at least discussions between the companies.


Some large investors, including Aberdeen Asset Management PLC and Investor AB, previously voiced public support for the AstraZeneca board. Aberdeen Chief Investment Officer Anne Richards said last week that the latest offer "certainly wasn't a knockout," and cited risks such as the potential for takeovers to disrupt research and development.


Both companies are grappling with aging portfolios and losing billions of dollars in sales to generic competition. Each company posted a 6% drop in sales last year. Pfizer's sales fell to $51.6 billion, while AstraZeneca's dropped to $25.7 billion.


Pfizer said it doesn't intend to make another offer for AstraZeneca.



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