AstraZeneca Plc (AZN) Chairman Leif Johansson got off the phone last night thinking Pfizer Inc. (PFE)’s offer of 53.50 pounds a share for the second-largest U.K. drugmaker was its best and final offer.
So Johansson was “surprised” to see Pfizer raise its bid to 55 pounds in a press release. The new offer of 69.4 billion pounds ($117 billion) may be a maneuver around AstraZeneca’s management, pitched publicly to pressure the company to enter formal negotiations. AstraZeneca rejected it today.
While Johansson wouldn’t say the surprise proposal was hostile, he said today in a telephone interview, “I certainly will not call it super-friendly.”
Pfizer’s offer late yesterday, which the company said was final, is the latest salvo in a battle of wills between the companies. Pfizer has offered more cash and stock, although London-based AstraZeneca said it won’t talk until its concerns about regulatory risk and the future of the combined company are addressed. New York-based Pfizer would also need to increase its offer to at least 58.85 pounds before the board could recommend a deal to shareholders, Johansson said.
“What the board would need to do is look at overall value, including the transaction risk, the execution risk, and we would try to put together a package, holistic view of what that value is,” he said.
So far, Pfizer has been unwilling to negotiate on any of the other issues of concern to AstraZeneca, Johansson said.
“They want to do price and price only, really with one number to get the job done,” he said.
AstraZeneca is disclosing the board’s price preference to signal to shareholders that it would consider the right offer, so long as other issues are satisfied, Johansson said. No other companies have sought to purchase AstraZeneca, he said.
With a deal, Pfizer would transfer its headquarters to the U.K. to gain a lower tax rate, add new cancer drugs to its product roster and take advantage of cost reductions from overlapping operations. AstraZeneca said its pipeline of promising drugs could be jeopardized in Pfizer’s hands because of a planned restructuring of the company.
Johansson said AstraZeneca has been willing to listen, and he rejected the idea that the company hasn’t been open to discussions. Pfizer shut down talks this weekend and took its improved offer to the public with its statement late yesterday, he said.
“We have not in any way been difficult to reach or get messages to,” Johansson said. “It was not us that started taking this public, and it was not us that broke off the informal discussions we had over the whole weekend, and it was not us that that made the final offer over the screens public this morning.”
Johansson, 62, a Swede, has been on the AstraZeneca board since 2012. He is also the chairman of Stockholm-based Ericsson AB, the world’s biggest maker of wireless networks, and the former chief executive officer of Swedish appliance maker Electrolux AB. (ELUXB)
Some investors have complained that AstraZeneca shut discussions prematurely. The stock fell 11 percent, the most since August 2002, to 42.88 pounds at the close in London. Pfizer rose as much as 2 percent and was trading up 1 percent at $29.42 at 1:32 p.m. in New York.
“We don’t think this is necessarily acting in shareholders’ best interests,” said Richard Marwood, senior investment manager at Axa Investment Managers in London.
Johansson said the board is carrying out its duty.
“We are a genuinely independent board elected by shareholders to do just exactly what we are doing, which is to give a sound recommendation of what they should do now,” he said.
(An earlier version of this story corrected the date of the previous stock decline.)
To contact the editors responsible for this story: Phil Serafino at email@example.com Kristen Hallam, Kim McLaughlin