AstraZeneca plc has rejected a final acquisition bid by Pfizer Inc., a deal valued at about $119 billion.

AstraZeneca, Pfizer, acquisition bid, merger, Leif Johansson, Ian Read, pharmaceutical company

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AstraZeneca nixes Pfizer's latest acquisition offer

May 19th, 2014

LONDON and NEW YORK – AstraZeneca plc has rejected a final acquisition bid by Pfizer Inc., a deal valued at about $119 billion.

AstraZeneca said Monday that its board declined Pfizer's proposal because the offer "undervalues the company and its attractive prospect."

Pfizer confirmed late last month that it had approached AstraZeneca about a potential merger. Pfizer said that in early January it made an offer that included a combination of cash and shares in the combined entity and represented a value of $76.62 per AstraZeneca share, a proposal valued at nearly $100 billion.

But AstraZeneca noted that it also saw Pfizer's final offer of $95.53 per share, announced Sunday, as significantly undervaluing the pharmaceutical company.

"The final proposal is a minor improvement which continues to fall short of the Board’s view of value and has been rejected," AstraZeneca chairman Leif Johansson said in a statement. "Pfizer's approach throughout its pursuit of AstraZeneca appears to have been fundamentally driven by the corporate financial benefits to its shareholders of cost savings and tax minimisation. From our first meeting in January to our latest discussion yesterday, and in the numerous phone calls in between, Pfizer has failed to make a compelling strategic, business or value case."

Pfizer reported on Sunday that its new offer represents its fourth and final proposal to merge with AstraZeneca. Pfizer said it sent a letter with the offer to Johansson on May 16 but, in response, AstraZeneca indicated that its board thinks the proposal "substantially undervalues" the company. Pfizer noted that in talks earlier on Sunday, AstraZeneca made clear that it is not currently prepared to accept a price close to Pfizer's latest proposal.

In addition, Pfizer said it won't make a hostile offer directly to AstraZeneca shareholders and "will only announce a firm intention to make an offer with the recommendation of the board of directors of AstraZeneca."

"We believe our proposal is compelling for AstraZeneca's shareholders and that a Pfizer-AstraZeneca combination is in the best interests of all stakeholders," stated Ian Read, chairman and chief executive officer of Pfizer. "We are excited at the opportunity to create a scientific powerhouse, delivering great benefits to patients and science in the U.K. and across the globe. We stand by our unprecedented commitments to the U.K. government. We believe that the benefits to all stakeholders can only be maximized through cooperative engagement between both companies.

"We have tried repeatedly to engage in a constructive process with AstraZeneca to explore a combination of our two companies. Following a conversation with AstraZeneca earlier today, we do not believe that the AstraZeneca board is currently prepared to recommend a deal at a reasonable price," Read added. "We remain ready to engage in a meaningful dialogue, but time for constructive engagement is running out. We have said from the beginning that we will remain disciplined in the price we are willing to pay, and we will not depart from that guiding principle. We believe that our proposal represents compelling and full value for AstraZeneca and that other issues that have been raised by AstraZeneca do not represent material difficulties."