Pfizer Takeover Is ‘Not Inevitable,’ AstraZeneca CEO Says
AstraZeneca Plc (AZN) Chief Executive Officer Pascal Soriot said a sale of the U.K. drugmaker is “not inevitable,” increasing pressure on Pfizer Inc. to raise its 60.4 billion-pound ($101 billion) offer to kick-start talks.
“The price is really far from what we think the value of the company is,” Soriot said today in a telephone interview. Because Pfizer is offering stock as part of the deal, AstraZeneca would also need assurances about the future of the new company before agreeing to negotiate, he said.
Soriot’s comments may increase speculation that New York-based Pfizer will take its offer directly to AstraZeneca shareholders. The proposed takeover is facing skepticism from U.K. lawmakers concerned about possible job cuts and Pfizer (PFE)’s unwillingness to commit to preserving the workforce of the country’s second-biggest drugmaker. Pfizer CEO Ian Read said it was difficult to make more specific guarantees because AstraZeneca hasn’t engaged in talks.
Read and Soriot both appeared before parliamentary committees yesterday and today to answer questions about consequences of the acquisition. With their testimony behind them, the focus is shifting to Pfizer’s next move. Pfizer plans to raise its offer, people with knowledge of the matter said.
A takeover could distract London-based AstraZeneca from advancing its pipeline of experimental drugs, and even more so were Pfizer to make a hostile bid, Soriot said.
“The risks are exacerbated in a hostile situation,” he said in the interview. “Any merger of this magnitude is disruptive and that’s why we would want to discuss strategy, the operating model and how we would go about merging these companies, if we ever get to this.”
Pfizer would try to protect AstraZeneca’s most valuable products in a takeover and wouldn’t jeopardize the pipeline, Read said to the Science and Technology committee today.
“There’s no truth that products of a critical nature would be delayed getting to patients,” Read said. “If anything, we would accelerate those products.”
Pfizer urged AstraZeneca to engage in talks so that the two companies could reach an agreement.
Pfizer contacted AstraZeneca last year to discuss a purchase, and Chairman Leif Johansson and Soriot flew to New York to meet with Pfizer, which made the initial bid of about 46.61 pounds a share, Soriot said.
The subsequent cash-and-stock offer initially valued the company at about 50 pounds a share and now has a value of 47.83 pounds a share. AstraZeneca rose 0.3 percent to 46.54 pounds at the close of trading in London.
“The offer today is 48 pounds,” Soriot said. “The offer is hardly different from the January price, but in the meantime, our pipeline has progressed quite a lot. I don’t see why we would accept today what we didn’t think was the right price in January.”
None of AstraZeneca’s shareholders have pressed him to accept the current offer, said Soriot, who is on the company’s board of directors.
“Of course, shareholders will tell us, but they don’t even need to tell us, that if the appropriate offer was made, we should consider the offer,” he said. “But we know this and we certainly agree.”
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