Pfizer courts AstraZeneca megamerger

US-based pharma behemoth Pfizer has publically announced its intention to make a merger offer to the UK’s AstraZeneca (AZ), in a deal valued at around $100 billion (£60 billion). AZ has rejected Pfizer’s advances, saying that without a ‘specific and attractive proposal, it was not appropriate to engage in discussions with Pfizer’.

Pfizer’s public offer follows a more secretive approach earlier in the year, which AZ’s board was equally disdainful of, saying that the offer significantly undervalued the company. This view takes account of AZ’s recent efforts to rebuild its drug pipeline and turn around its declining performance after losing patent protection for several top-selling drugs.

Any deal that does go ahead will be complex. Pfizer is proposing to shift its tax domicile to the UK to take advantage of lower corporation tax rates and tax breaks on UK-based discoveries through the government’s ‘patent box’ scheme. It would also need to account for the fact that AZ is in the middle of a huge restructuring process, including moving its main R&D operations from Alderley Park in Cheshire to Cambridge. However, this game is not new to Pfizer, having completed similarly large deals in the past when it took over Wyeth for $68 billion in 2009, and Warner-Lambert for $112 billion in 1999. Pfizer’s chief executive, Ian Read, pointed to this ‘proven track record of acquisitions’, saying that the company’s ‘extensive integration experience’ would help make the deal successful.

Further analysis of this and other deals can be found on the Chemistry World blog

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