Transfer Pricing Associates

AstraZeneca is still not satisfied

post Tuesday May 20, 2014

Tags: astrazeneca, merger, pfizer, pharmaceutical


On Sunday night Pfizer made a final offer of $70 billion pounds for the acquisition of AstraZeneca. If AstraZeneca accept the offer, this merger would make them the biggest pharmaceutical company in the world. If the British company refuse the offer, Pfizer would walk away. AstraZeneca rejected the offer.

The US group said its new offer was final and could not be increased. It said it would not make a hostile offer directly to AstraZeneca shareholders and would only proceed with an offer with the recommendation of the AstraZeneca board.

AstraZeneca chairman Leif Johansson saw no prospect of a deal with Pfizer before the deadline of May 26 set under British takeover rules. Pfizer will most likely not return with a higher last-minute offer. The major shareholders of AstraZeneca were furious about the refusal; their shares fell with 15 percent, while Pfizer shares rose with 1 percent.

Pfizer wanted to create the biggest drugs firm in the world, with a tax base in Britain and headquarters in New York. The corporate tax rates in the United States are higher. However, the merger was not received well by everyone in Britain, politicians and scientists fear cuts in jobs and research as we explained in our article of Thursday May 1, 2014. 

AstraZeneca rejected the offer from Pfizer and the British company only has until 5 p.m. on May 26 to change their mind, otherwise the proposal will expire. After this date, Pfizer will have to wait six months before making another bid.

The British pharmaceutical company has shown details of its pipeline of new drugs and says that there is no need for a merger. Analysts, however, believe that a merger with Pfizer could increase their sales by 75% to $45 billion a year by 2023.

Just like the talks of a merger a few weeks ago, several parties in the UK have shown their concern about the deal. Please refer to Pfizer eager to takeover AstraZeneca.The British Prime Minister David Cameron wanted more assurances from Pfizer, even though he is the head of the free-market Conservative Party.

Pfizer responded with a commitment to complete a new research center in Cambrige for AstraZeneca, to put a fifth of its research staff in Britain and to maintain a factory in northern England. They also added that these commitments could be changed if circumstances would change.

Furthermore, the tax aspects of the merger are also raising questions in the United States. Lawmakers are now considering to make legislations that will prevent corporations to re-incorporate their company in other countries in order to avoid paying more tax, such as in the Pfizer deal. This is called corporate inversions.

These corporate inversions are not unusual in the world of mergers and deals. They have helped to complete a wave of deals in the pharmaceutical sector in recent months, but the Pfizer-AstraZeneca deal would be the largest one so far.

Source: reuters

Image courtesy of David Castillo  /

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