The WSJ reports, "AstraZenecaPLC on Friday rejected an improved takeover offer fromPfizer Inc. worth more than $106 billion, saying the proposal substantially undervalued the company and putting the onus back on Pfizer Chief Executive Ian Readto either raise his bid again, go directly to shareholders, or walk away.
The British company said the financial and other terms described in the U.S. group's latest proposal were inadequate and not a basis on which to engage in talks.
"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 said in a statement.
The rejection came roughly four hours after Pfizer announced a fresh offer worth £50 ($84.47) a share, valuing the U.K. drug maker at £63 billion ($106.43 billion).
The revised offer represents a premium of about 7% over Pfizer's previous bid, made back in January, and increases the cash component of the offer to about 32% from 30% previously. Under the revised offer, AstraZeneca shareholders would get 1.845 shares in the combined company and £15.98 in cash.
Investors, too, appeared underwhelmed by the new offer. AstraZeneca shares were trading down about 1% in late morning London trading, hovering around £48 a share, still well below the £50 offer price, suggesting market skepticism about a deal getting done or a white knight emerging.
"We are showing strong momentum as an independent company, in particular with our exciting, rapidly progressing pipeline, which the board believes will deliver significant value for shareholders," AstraZeneca Chairman Leif Johanssonsaid. "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."
In an interview with The Wall Street Journal, AstraZeneca Chief Executive Pascal Soriot said the revised offer "underappreciated" the company's pipeline of new drugs in development and that no investors had approached him to ask him to consider the offer. "We haven't had anybody contacting us to say, 'Please engage, it's a good starting point,'" he said
Mr. Soriot added that he worries a deal could disrupt drug development. "Any merger creates disruption, and if you want to look for savings it creates even more disruption," he said".
