Still not good enough – that was the response to US drugmaker Pfizer’s improved bid for Britain’s AstraZeneca.
Its latest offer is 63 billion pounds (76.7 billion euros), but AstraZeneca’s board said that “substantially undervalues” the company, and it will not even to talk to the Americans.
Analysts expect Pfizer will have to boost the price and believe it could try to bypass the board by going directly to the shareholders with a hostile takeover bid.
A merger would create the world’s biggest pharmaceuticals company, boost Pfizer’s pipeline of cancer drugs, cut its tax bill and lead to significant cost savings, but could encounter competition problems.
Promises to politicians
The takeover, which would be the largest acquisition of a British company by a foreign business, has stirred political controversy in Britain.
In an attempt to smooth relations with the government, Pfizer Chief Executive Ian Read wrote to Prime Minister David Cameron, promising to complete a substantial new research centre planned by AstraZeneca in Cambridge and retain a manufacturing plant in Macclesfield.
Read also said that 20 percent of the enlarged group’s research and development workforce would be in Britain.
Pfizer’s commitment to research is an issue because three years ago it shut most of its R&D in Britain – at the site where Viagra was invented – cutting nearly 2,000 jobs.
UK Science Minister David Willetts said Pfizer had moved a long way in its commitments to British science and research, but the opposition Labour party was scathing about the potential deal.
“Pfizer has a very poor record on previous acquisitions. Do we really want a jewel in the crown of British industry, our second biggest pharmaceutical firm, to basically be seen as an instrument of tax planning?” said business spokesman Chuka Umunna.
Britain is wary of foreign takeovers because of events like Kraft Foods’s 2010 acquisition of Cadbury. The US firm promised to keep open a key Cadbury factory, but reneged on that soon after the deal was completed.
Any eventual AstraZeneca/Pfizer deal will be studied by competition regulators around the world.
Scrutiny could be especially intense in China since Pfizer and AstraZeneca rank No. 1 and No. 2 among multinational suppliers in the country’s prescription drug market.