AstraZeneca saw around £7 billion cleaved off of its stock value earlier this week as shareholders reacted to news that it had rejected Pfizer’s final offer of £55 a share.
Group chairman Leif Johansson told BBC Radio 4’s Today programme Pfizer’s advances were rebuffed because his firm could create better value for shareholders independently, its ability to get drugs to market quickly would be limited by a takeover, and that deal came with a “big execution risk”.
One of the key sticking points with shareholders and deal observers seems to be that less than 50% of the deal – and its secured value – is made up of cash, while many are suspicious of the US drug giant’s true motives, particularly with regard to tax minimisation, not to mention fears over substantial job culls on UK shores.
Nevertheless, an evidently significant portion of shareholders seem at odds with AstraZeneca’s decision to reject the offer, given the plunge in its stock price.
Fund manager Schroders, which holds a 2% stake in the Anglo-Swedish drugmaker, said it is disappointed with the “quick rejection” and that is is encouraging the firm “to recommence their engagement with Pfizer and subsequently their shareholders”.
Others such as Axa Investments and Jupiter Fund Management have also reportedly voiced disappointment that AZ has failed to undertake closer talks with both its shareholders and Pfizer before reaching a decision on the proposed deal.
But on the other side of the fence, the move to remain independent has been applauded.
Fund manager Neil Woodford, who controls a £350 million stake in AZ, said: “I remain convinced that an independent AstraZeneca will achieve far better returns for its shareholders than the combination of cash and Pfizer paper would have delivered,” warning that a takeover by Pfizer would have raised “very legitimate concerns that the UK’s critical infrastructure in this industry would be harmed”, according to the Guardian.
Six month wait?
Now the final bid has been rejected, Pfizer is unable to come back with another offer for six months, a fact which AstraZeneca was forced to remind its shareholders about in an announcement to the stock exchange late last night (Tuesday).
“We have decided that it is necessary to issue a statement to make absolutely clear that Pfizer’s final proposal, which the board rejected, is not capable under Takeover Panel rules of being increased or even suggested at being increased, privately or publicly, with or without the board’s approval or recommendation,” he said, adding: “shareholders are strongly advised to take no action”.
BBC News notes that many AZ shareholders believe the US government will have made moves to close the tax loophole believed to be fuelling Pfizer’s attraction to the deal, and cited one investor as noting: “If it doesn’t happen now, I don’t think it will ever happen”.
The only way forward at this point would be for AZ shareholders to force another look at the rebuffed offer, though industry observers seem to feel that this is most unlikely.
