After speculation mounted in recent weeks, Pfizer Inc. said it has approached AstraZeneca about a potential merger.


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Pfizer confirms interest in merger with AstraZeneca

April 28th, 2014

NEW YORK – After speculation mounted in recent weeks, Pfizer Inc. said it has approached AstraZeneca about a potential merger.

Pfizer said Monday that in January it submitted an indication of interest to the AstraZeneca board regarding a possible deal and, after "limited high-level discussions," AstraZeneca declined further negotiations.

But Pfizer said recent market developments led the company to contact AstraZeneca on April 26 to renew talks to craft a bid that both pharmaceutical companies could put to their shareholders. AstraZeneca, though, again declined, and Pfizer said it's currently considering its options regarding a potential offer to AstraZeneca.

Pfizer's previous proposal to AstraZeneca on Jan. 5 included a combination of cash and shares in the combined entity and represented a value of $76.62 per AstraZeneca share, a premium of about 30% to AstraZeneca's closing share price on Jan. 3. The proposal reportedly was valued at nearly $100 billion.

AstraZeneca said Monday that its board deemed Pfizer's January offer "very significantly undervalued" and was concerned that the transaction included a large proportion of Pfizer stock.

"On 26 April 2014, Ian Read, chairman and CEO of Pfizer, contacted Leif Johansson, the chairman of AstraZeneca, for the first time since January 2014. In this discussion, the chairman of Pfizer did not make a specific proposal regarding an offer to acquire AstraZeneca, but nevertheless Pfizer requested that both companies issue a joint statement, prior to the market open on 28 April 2014, announcing that they had entered into discussions regarding a combination," AstraZeneca said in a statement Monday.

AstraZeneca said its board considered Pfizer's request but, without a "specific and attractive proposal," it decided not to engage in additional discussions.

"We have great respect for AstraZeneca and its proud heritage as an innovation-driven biopharmaceutical business with a rich science-based foundation in both the United Kingdom and Sweden. In addition, the United Kingdom has created attractive incentives for companies to manufacture products and maintain and protect intellectual property, and we have seen that capital and jobs have followed these types of incentives," Pfizer's Read said in a statement. "We believe patients all over the globe would benefit from our shared commitment to R&D, which is critical to the future success of the pharmaceutical industry, in the form of potential new therapies that help to fight some of the world’s most feared diseases, such as cancer.

"The combination of Pfizer and AstraZeneca could further enhance the ability to create value for shareholders of both companies and bring an expanded portfolio of important treatments to patients. A potential combination with AstraZeneca aligns with Pfizer’s current structure and fully supports its existing strategy to build world-class businesses. The combination would complement our two innovative businesses and our Global Established Pharmaceutical business, allowing us to maintain the flexibility for the potential future separation of our businesses whilst at the same time broadening our pipeline breadth and potential new product launches over coming years," Read added.

Under the potential transaction, Pfizer and AstraZeneca would combine under a new global, U.K.-incorporated holding company that likely would have management in the United States and the United Kingdom and maintain head offices in New York and list its shares on the New York Stock Exchange, according to Pfizer.

Pfizer stated Monday that it's "confident a combination is capable of being consummated." Under British takeover rules, Pfizer has until May 26 to make a definite offer or to withdraw its interest.

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