LONDON May 19 U.S. drugmaker Pfizer has
left itself no room to return with a higher offer for
AstraZeneca before a deadline expires next Monday due to
Britain's strict takeover rules, even if the British firm wanted
it to, experts say.
Astra, Britain's second largest drugmaker, rejected Pfizer's
fourth and "final" offer on Monday, just hours after receiving
it, saying the $118 billion proposal still undervalued the firm.
Pfizer, which wants to create the world's largest drugs
firm, had described that offer as final and said it would walk
away if AstraZeneca did not accept.
But the wording of Pfizer's statement, using terms such as
the "final proposal" rather than "offer" and the fact it called
on investors to pressure the AstraZeneca board, sowed confusion
amongst shareholders and analysts about whether it could still
return with a higher offer.
And the shares, while falling 11 percent, still retained
some of their bid premium, reflecting a residual hope that the
U.S. company could still find a way for negotiations to
continue. The Takeover Panel was inundated with calls from
investors seeking clarification, sources said.
But one source familiar with the deal said Pfizer could not
now increase its offer and described the situation as an "angry
A deal strategist at a London brokerage who also asked not
to be named said there was not really any wiggle room.
"In terms of the headline number, can they come out and pay
58 pounds tomorrow? No they cannot," the strategist said.
"Saying it is final is really explicit."
The only way a deal could take place now is if AstraZeneca
shareholders forced the board into a complete u-turn - accepting
the current offer.
With the chance of that looking highly unlikely, several M&A
lawyers spoken to by Reuters said without that, Pfizer could not
return with a higher offer for at least three months.
Pfizer first went public with its intention to buy
AstraZeneca at the end of April, immediately raising concerns
that any takeover would result in hefty job losses and damage to
Britain's scientific base.
Under Britain's takeover regulations, Pfizer then had a
28-day "put up or shut up" deadline to make an offer. That date
was next Monday, May 26. Pfizer will have to release a statement
by then making clear its intentions.
The rules were tightened after U.S. company Kraft bought
Cadbury, a chocolate company that was cherished by most Britons,
after a prolonged battle in 2010.
The resulting public outcry, and political accusations that
British firms were easy target for hostile takeovers by foreign
companies, led to the independent Takeover Panel making changes
designed to give more power to the pursued company.
As well as a fixed "put up or shut up" deadline, potential
bidders had to be named, and they were required to give more
information about their intentions for the business and its
Pfizer, which intended to keep its headquarters in New York
but its tax base in Britain, gave a five-year commitment to
complete a research centre, retain a key factory and put a fifth
of the new firm's research staff in Britain.
Despite the promises, the deal met fierce opposition from
politicians and AstraZeneca itself, which went as far as to
suggest a takeover could result in delays to its drugs pipeline
and a risk to life.
"It doesn't look like there's any wiggle-room to try to
increase the offer from here," one top 30 shareholder in
Under takeover panel rules, Pfizer cannot come back with
another offer for six months after the deadline, unless
AstraZeneca's board engages in talks. Even if that were the
case, it would not be able to raise its offer price for three
months after the date.
One way for Pfizer to lift the offer before the deadline
ends would be if, under pressure from shareholders, AstraZeneca
decided to do a u-turn and engage in talks. The two sides could
propose increasing the amount AstraZeneca pays as a dividend as
a way to bump up the price, but that also carries risks, lawyers
"It's something that could be put to the panel, but I think
they wouldn't look favourably on that, because clearly one is
supposed to be observing the spirit (of the law)," one lawyer
specialising in corporate M&A told Reuters.
"If they see them colluding to get around the final offer
statement, which is what AstraZeneca making a major payout by
way of a distribution would be, I would have thought the panel
wouldn't be happy with that."
(Additional reporting and writing by Paul Sandle; additional
reporting by Jemima Kelly; editing by Philippa Fletcher)