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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: Twitter: Dereklowe

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« Can Anything Stop Pfizer-AstraZeneca From Going Through? | Main | Allergan: "Golf-Course Deprived" »

May 2, 2014

AstraZeneca Tell Pfizer to Buzz Off

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Posted by Derek

That's what I gather from this report, anyway. Reports had leaked out that Pfizer was going to make a higher offer for AZ shares, and that happened earlier this morning. But AstraZeneca's board has turned it down flat, saying that it undervalues the company and "is not an adequate basis" for further discussions.

You'd figure that Pfizer has been sounding out some large shareholders about an appropriate figure, so they have a rough idea of what it would take to win a hostile bid. I'd guess that they're still not ready to go that route, though, and since this latest offer isn't a huge advance on the first public one, they're probably going to come back with another one after they've let AZ's management bake in the sun for a little while. Unfortunately, I still can't come up with a reasonably probable way that leads to Pfizer just buzzing off as requested. They've run their numbers, they have an opportunity, and they know what they're willing to pay. What's going on now are their efforts to keep the deal from happening in the top end of their calculated range. But I have to think that what Pfizer is willing to pay is also high enough to get enough AstraZeneca shareholders to go along. I hope I'm wrong about that.

Comments (8) + TrackBacks (0) | Category: Business and Markets


1. alig on May 2, 2014 8:52 AM writes...

If you look closely at the rejection, AZ is concerned at the percentage of Pfizer stock vs cash in the offer. If Pfizer is willing to pay all cash for the deal, it would go through right now.

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2. Ben Zene on May 2, 2014 9:40 AM writes...

BBC website in the UK cites Chinese approval as a possible problem with this deal -

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3. Anon on May 2, 2014 10:12 AM writes...

I think Pfizer only has about 10 billion cash. Why would AZ shareholders swap their stock for Pfizer's plus small about of cash. Isn't that the same as buying Pfizer stock (with dividend) instead of investing in AZ?

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4. Ermintrude on May 2, 2014 6:04 PM writes...

Pfizer hasn't got enough money to buy AZ for cash, and no way could they borrow $50bn. So effectively this is a stock-swap: you hand in your AZ shares, you get Pfizer shares, and pray.

Which, frankly, sounds insane to me: Pfizer are badly run and show no signs of having any goals for this beyond tax avoidance. Loriot has inherited a mess and clearly wasn't expecting this, but swapping him for Pfizer? Nope.

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5. Anonymous on May 3, 2014 9:53 AM writes...

Perhaps we are missing the silver lining here.

Headquarters would be moved from NYC to the UK. If the UK law is anything like Swiss law, in order for headquarters to be incorporated in the UK senior executives must work in the UK.

NYC executives will get a taste of their own medicine. Be interesting to see the current headquarters site shuttered or significantly reduced.

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6. cliffintokyo on May 3, 2014 8:59 PM writes...

Its not all about money.
From the reports in the Chemistry press, the British government seems to be wishing that Pfizer would 'buzz off'.

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7. simpl on May 5, 2014 4:07 AM writes...

We have been watching the poor financial figures for Eli Lilly and AstraZeneca for several years now, it has been clear that "the future" would happen to these two early.
Of course, pride hurts when you bring more value as a tax break than as the fruits of a century of researching pharmaceuticals.
But the question in my mind is, isn't AZ getting a better exit this way, rather than breaking up piece by piece, the Eli Lilly way?

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8. sepisp on May 5, 2014 7:27 AM writes...

Paying with slips of paper with "I'll pay later" written on them is not a payment in the first place. Why doesn't Pfizer arrange a public offering to raise cash for the merger, if they believe in it so much? Not being able to do so means that they can't convince anyone else of the benefits of such a merger.

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