AstraZeneca Declares Pfizer Bid ‘Inadequate’

In a press release Friday morning, AstraZeneca said that Pfizer’s offer was not a “basis on which to engage Pfizer. The large proportion of the consideration payable in Pfizer shares and the tax-driven inversion structure remain unchanged. Accordingly, the Board has rejected the Proposal.”

AstraZeneca’s chairman said:

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.

AstraZeneca’s key products include Crestor, Seloken/Toprol, Iressa, Faslodex, Zoladex, Pulmicort, Symbicort, Nexium and Seroquel. Pfizer’s key products include Lyrica, Prevnar, Enbrel, Celebrex, Lipitor, Viagra, Zyvox, Norvasc, Sutent and Premarin.

Pfizer’s revenue in 2013 was more than $51.5 billion, basically twice that of AstraZeneca’s $25.7 billion (converted from pounds).

Pfizer is left with a small handful of choices: give up, sweeten the bid yet again or take the offer directly to shareholders. One fund manager told The Wall Street Journal before AstraZeneca rejected this latest offer that a deal could get done at a price of £53 to £55. That may not be enough now, and AstraZeneca appears to want the cash portion of the deal to be larger.

And why not? Pfizer is already going through a restructuring and adding 51,000 new employees and expanding the product pipeline is sure to cause some pain. AstraZeneca wants cash, not promises. Going hostile probably will not help Pfizer’s cause much either.

AstraZeneca’s ADSs were down about 0.5% in premarket trading Friday, at $80.65 in a 52-week range of $46.87 to $82.68. Pfizer’s offer was worth about $84.50.

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