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AZ spurns Pfizer, Bayer/Merck deal nears

Friday, May 02, 2014 - 02:27

May 2- Pfizer ups its offer for AstraZeneca to $106bn in a deal that would create the world's largest pharma - but is promptly rejected. And Bayer is reported to be near to closing a $14bn deal with Merck. Hayley Platt reports.

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It's already rejected one bid - now UK drugs maker AstraZeneca rejects a second. The improved £63 billion pound offer or £50 a share was made by U.S. rival Pfizer. There's still hope the deal will go ahead - making it the world's biggest pharmaceutical company. It would help boost Pfizer's pipeline of cancer drugs, cut its tax bill and create significant cost savings. But there are still obstacles to be overcome, says BGC's Mike Ingram. SOUNDBITE: Mike Ingram, market strategist, BGC Partners, saying (English): "It's quite likely that Pfizer is going to come back with an improved offer. But at the moment AstraZeneca are not opening the books to Pfizer. So their ability to significantly raise the offer is actually quite constrained at the moment." Pfizer executives, including CEO Ian Read, have been in London on a charm offensive. They're pushing hard to convince the UK government and AstraZeneca shareholders, it's a good deal. It would be the largest foreign takeover of a British company - if it goes ahead. Amongst other assurances, Pfizer will want to show it can be trusted to keep its promises. Critics look back to U.S. based food group Kraft when it took over Cadbury in 2009, and closed one of the chocolate maker's plants after saying it wouldn't. IG's Brenda Kelly says UK politicians will be keeping a close eye on Pfizer. SOUNDBITE: Brenda Kelly, IG, saying (English): "We have seen Pfizer fall back on promises in the past in terms of closing a research centre and of course the MPs have been very concerned as to whether this will have an impact on competition on this particular space but also for the wider economy in terms of job losses." It could also see China intervene. Pfizer and AstraZeneca are already its two biggest pharmaceutical firms. A merger would raise anti-trust issues. China's six-year-old anti-monopoly law is increasingly playing a role in international deals, often forcing painful delays. SOUNDBITE: Mike Ingram, market strategist, BGC Partners, saying (English): "We saw in the case of Glencore Xstrata that China can actually throw a spanner in the works in these kind of deals for quite some time and ultimately they might force some disposal from the combined entity." Pfizer aren't the only U.S. drugmaker in the market for change. Sources tell Reuters that Bayer is close to a deal with Merck to buy its consumer unit for close to $14 billion. No decisions on either deals have been made public yet. But Pfizer is widely expected to make some sort of announcement on Monday to coincide with its first quarter results.

AZ spurns Pfizer, Bayer/Merck deal nears

Friday, May 02, 2014 - 02:27

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