Pfizer (NYSE: PFE) and AstraZeneca (NYSE: AZN) had returned to the negotiating table, with a sweetened offer for the British drug maker, according to a story by The Wall Street Journal. But AstraZeneca issued a statement this morning that the board has turned down the $106 billion offer.
So much for third time lucky. It had been the third time Pfizer had approached AstraZeneca this year. AstraZeneca had rejected Pfizer’s most recent offer of $100 million, pointing out that the offer undervalued its business. AstraZeneca Chairman Leif Johansson said in a statement:
“The financial and other terms described in the Proposal are inadequate, substantially undervalue AstraZeneca and are not a basis on which to engage with Pfizer…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.”
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It’s not certain what a combined company would look like. If it is one business, it would be the largest drug company in the world and it would be domiciled in the UK to take advantage of a lower tax rate. On the other hand, Pfizer is believed to want to break up the company into more specialized, streamlined businesses.
A stronger oncology portfolio is part of the attraction, just as it was with Novartis and GlaxoSmithKline’s deal. In oncology alone, AstraZeneca would double the size of Pfizer’s portfolio from six to 13 as far as late-stage or approved drugs are concerned. Cancer meds accounted for 11 percent of sales for AstraZeneca last year. For experimental oncology drugs, AstraZeneca would add 14, including five that are yet to be approved, such as olaparib to trigger cancer cell death in certain cancers.
[Photo credit: Merger concept cloud from BigStock Photo]
