Pfizer says will pursue AstraZeneca

Pfizer publicly announced its interest in acquiring AstraZeneca of Britain on Monday, in what would be one of the biggest in an already swelling series of deal efforts among drug makers.

In a statement, Pfizer said it was willing to pay £58.7 billion, or $98.7 billion. That would make it one of the largest-ever acquisition efforts in the pharmaceutical industry, surpassing Pfizer's $90-billion takeover of Warner-Lambert 14 years ago.

Pfizer's prospective bid was valued at £46.61 a share, roughly 30 per cent above where AstraZeneca was trading at the beginning of the year.

The move is aimed at putting pressure on AstraZeneca, which has turned down a number of informal takeover approaches from Pfizer.

AstraZeneca shares surged 16.1 per cent, to £47.37 in afternoon trading in London on Monday. Shares in Pfizer were up 2.6 per cent in premarket trading, at $31.53.

On Monday, AstraZeneca said in a statement that it had agreed to meet in January with Pfizer, which made a preliminary offer of cash and stock representing a value of £46.61 a share - the same amount Pfizer revealed on Monday.

AstraZeneca said its board determined in January that the offer "very significantly undervalued AstraZeneca and its prospects".

The company said that on Saturday, Pfizer's chairman requested that the companies make an announcement before the markets opened on Monday saying they had entered discussions regarding a potential deal, though Pfizer did not make a specific proposal. AstraZeneca's board declined.

AstraZeneca advised shareholders to take no action on Monday and said it was making its statement without any agreement with or approval by Pfizer.

The pharmaceutical industry has helped push deal activity to heights unseen since before the financial crisis of 2008. On April 22 alone, drug makers announced $74 billion worth of potential deals, including the potential takeover of the maker of Botox and a complicated series of asset swaps between Novartis of Switzerland and GlaxoSmithKline of Britain.

In many cases, these companies have been driven to deals to find new areas of growth as onetime blockbuster treatments lose patent protection. Instead of pouring money into researching new products that could sputter out, they are looking to buy more of what they hope are likely winners.

To Pfizer, AstraZeneca may be attractive because of its portfolio of cancer drugs, an area that Pfizer has also made a priority as it seeks to restock its product pipeline.

A takeover of AstraZeneca would also let Pfizer use some of the cash that it keeps abroad without incurring a big tax bill. The company has disclosed holding about $69 billion in earnings from international subsidiaries as of December 31.

In its statement on Monday, Pfizer added that it would reincorporate the combined company in Britain, a corporate manoeuvre that it said would shield AstraZeneca's overseas earnings from US tax laws. It would maintain offices in the US and Britain and would remain listed on the New York Stock Exchange.

"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," Ian C Read, Pfizer's chairman and CEO, said. "A potential combination with AstraZeneca aligns with Pfizer's current structure and fully supports its existing strategy to build world-class businesses."

But the board of AstraZeneca has viewed the previous approaches as opportunistic and ill-timed, with an insufficient takeover premium, according to a person briefed on those discussions. AstraZeneca has tried to improve its fortunes on its own, seeking to reverse declines in revenue and profit resulting from the loss of patent protection on some of its best-selling treatments as well as setbacks in developing new drugs.

Under British takeover rules, Pfizer now has until 5 pm London time on May 26 to make a firm bid for AstraZeneca.

The American company is being advised by Bank of America Merrill Lynch, Guggenheim Securities and JPMorgan Chase.

©2014 The New York Times News Service