AstraZeneca Rejects Pfizer's Final Offer

AstraZeneca’s board of directors rejected Pfizer’s reportedly final offer of $118 billion for a proposed merger of the two companies after a weekend of discussion and offers.

In a statement issued on May 19, Leif Johansson, chairman of AstraZeneca said, said the board rejected Pfizer’s final proposal "because it is inadequate and would present significant risks for shareholders, while also having serious consequences for the company, our employees and the life-sciences sector in the UK, Sweden and the US."

On May 17, AstraZeneca rejected a May 16 offer from Pfizer, stating that the financial terms of the "substantially undervalued the Company and its attractive prospects." The board also asked Pfizer to explain the key aspects of its proposal that were not described in Pfizer’s letter, regarding the business operating model and segmentation which would allow AstraZeneca to deliver on its research and development pipeline and prospects; Pfizer’s plans for cost savings, including around research and development, pipeline delivery and employment; and Pfizer’s proposed tax inversion and regulatory clearances.

Following a conference call between the leaders of the two companies on May 18, the AstraZeneca board rejected the May 16 offer. Later on May 18, Pfizer issued a statement it identified as is final proposal, which the AstraZeneca board rejected on May 19.

In its final offer, Pfizer said that it would not make a hostile takeover offer directlly to AstraZeneca shareholders and would only announce a firm intention to make an offer with the recommendation of the AstraZeneca board.

Under British takeover rules, Pfizer's proposal will expire on May 26. If there is no further discussion or a firm offer, Pfizer must wait six months before making another bid.

Sources:
AstraZenecaPfizerReuters