The request from Pfizer indicates that only a concerted late effort by AstraZeneca’s top investors to pressurize the board into reconsidering its position could break the deadlock at this stage, leaving prospects of a deal hanging by a thread.
Pfizer said the £55 per share proposal made over the weekend is its final offer and it is not prepared to pursue a hostile deal without the cooperation of AstraZeneca’s board.
AstraZeneca’s share price has plummeted more than 12% today to £42, reflecting the fact that the chances of a deal are now a lot slimmer.
The largest shareholders in the UK-based company include BlackRock, Legal & General Investment Management, Scottish Widows Investment Partnership, Invesco Asset Management, Capital Research & Management Co, Wellington Management, Schroder Investment Management, State Street Global Advisors, Aberdeen Asset Managers and Norges Bank Investment Management.
Time is fast running out for shareholders to act though as a firm offer must be made by 5pm on 26 May unless both companies request an extension from the Takeover Panel. If this deadline passes Pfizer will not be allowed to make a further approach for at least six months.
“I wouldn’t rule out Pfizer coming back with the same total offer but with a greater proportion being cash," said Justin Urquhart Stewart of Seven Investment management. “I don’t think many Astra shareholders are very keen on holding Pfizer paper," he added. Even if this was the case, Stewart added that in his view the proposal would still be unlikely to prompt major shareholders to force a deal through this time around, but Pfizer may try again in six months if encouraged.
The two companies did in fact engage over the weekend, it has emerged, but there was no meeting of minds according to statements from the two companies.
"Pascal Soriot, 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 per share,” said AstraZeneca chairman Leif Johansson. “The final proposal is a minor improvement which continues to fall short of the board's view of value and has been rejected," he added.
Pfizer’ CEO Ian Read sounded close to accepting he has reached the end of the road with AstraZeneca for now. “We have tried repeatedly to engage in a constructive process with AstraZeneca to explore a combination of our two companies,” he said. “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,” he added.
