LONDON ( The Deal) -- The U.K.'s AstraZeneca ( AZN) on Monday, May 19, took the bold step of rejecting a thrice-sweetened 69.4 billion pound ($116.8 billion) takeover proposal from Pfizer ( PFE), which had on Sunday ruled out hostile action and declared its latest offer final.
Pfizer's Sunday bid was worth 5,500 pence per share, at the top of external expectations of what the New York company may need to propose to win round its target. Breaking down into 1.747 shares plus 2,476 pence in cash, the offer lifted the cash component to 45% from 33% as the Viagra maker sought to address the U.K. target's criticism that a May 2 proposal was too stock-heavy.
But the London-based pharmaceuticals group said Pfizer's latest offer -- its fourth after Pfizer revealed it had made an hitherto undisclosed proposal on May 16 -- "undervalues the company and its attractive prospects." In an apparent attempt to preempt shareholder criticism about its unwillingness to entertain the American proposal, AstraZeneca also indicated it was aiming for a price of 5,885 pence.
"Pascal Soriot, (CFO) Marc Dunoyer and I had a lengthy discussion with Pfizer over the weekend about the proposal Pfizer made on Friday evening at a value of 53.50 pounds per share," said AstraZeneca Chairman Leif Johannson, referring to the previously undisclosed 5,350 pence proposal. "During this discussion, Pfizer said that it could consider only minor improvements in the financial terms of the Friday proposal. In response, we indicated, even assuming that other key aspects of any proposal had been satisfactory, that the price at which the board of AstraZeneca would be prepared to provide a recommendation would have to be more than 10% above the level contained in Pfizer's Friday proposal. The final proposal is a minor improvement which continues to fall short of the board's view of value and has been rejected."