REFILE-UPDATE 3-Schroders, Fidelity reveal investor split as Astra rejects Pfizer

Tue May 20, 2014 3:11pm EDT

(Inserts full name of London-based Fidelity Worldwide Investment in lead paragraph)

* Schroders urges AstraZeneca to restart talks with Pfizer

* Many investors frustrated at breakdown of takeover talks

* But Fidelity says Pfizer was not "a suitable partner"

By Chris Vellacott

LONDON, May 20 (Reuters) - Schroders, AstraZeneca's 12th-biggest shareholder, urged the drugmaker to restart takeover talks with Pfizer as rival Fidelity Worldwide Investment, ranking 18th, backed the British company's stance.

The division highlighted a split among investors following the collapse of a potential $118 billion transaction, leaving many shareholders frustrated at missing out on a big windfall.

Schroders said on Tuesday it was disappointed with "the quick rejection by the AstraZeneca board" of an improved 55 pounds-a-share offer and the decision by Pfizer to "draw a premature end to these negotiations by calling their latest proposal final".

"Given the increase in the offer we would encourage the AstraZeneca management to recommence their engagement with Pfizer, and subsequently their shareholders," the fund manager, which owns 2 percent of AstraZeneca, said.

Schroders' comments echoed those of other shareholders, including Jupiter, who were dismayed at AstraZeneca's rejection of Pfizer's offer on Monday.

The deal would have created the world's biggest drugs group. Instead, AstraZeneca's rejection triggered the biggest intra-day slump in its shares since the creation of the company through a merger of British and Swedish businesses in 1999.

The anger, however, was not universal.

"I think Astra did the right thing. I don't think that Pfizer was a suitable partner," said Fidelity's Global Chief Investment Officer for Equities, Dominic Rossi, arguing the deal was motivated by Pfizer's desire to cut taxes.

"The Astra board has taken a very difficult decision. They understood in rejecting the offer they would be criticised by some shareholders. We will now have to wait two to three years to see whether they were right. With a little luck they could well be." Fidelity owns 1.2 percent of AstraZeneca, according to Thomson Reuters data.

Anne Richards, chief investment officer at Aberdeen Asset Management which holds 2.4 percent of the British drugmaker, also said Pfizer's offer "certainly wasn't a knock-out".

Veteran fund manager Neil Woodford, who controls AstraZeneca shares in funds he runs for wealth manager St James's Place , said he was "relieved that AstraZeneca appears to have retained its independence".

Strict British takeover rules mean the angry stalemate between AstraZeneca and Pfizer is almost certain to end with no deal, since the only way forward would be for AstraZeneca's board to do a U-turn and recommend Pfizer's final offer. (Additional reporting by Ben Hirschler; Editing by Erica Billingham)

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