Pfizer Inc. (NYSE: PFE) has abandoned any effort to purchase AstraZeneca Plc (NYSE: AZN) for $117 billion. The US drug maker issued a statement saying that the bid of $117 billion rejected by its British competitor was of “full value.” In turn, AstraZeneca informed the public as well as Pfizer that it welcomed the chance to continue the building of momentum that the two companies have already shown.
According to take-over rules in the UK, Pfizer had until 5 PM on May 26 to make a convincing offer. Regulations have prescribed a period of cooling off for a minimum of three months prior to the restart of talks. This will give both the drug makers’ ample time to make a decision on the future course of action. Pfizer harbors the hope that the investors of AstraZeneca will compel the board of the London-headquartered company to take a decision. At the same time, AstraZeneca faces considerable pressure to fulfill its plethora of promises that it will generate a productive collection of experimental medicines.
High probability of deal
According to Erik Hultgard, Analyst, Nordea Bank AB, there is a fair chance of a deal happening in the latter period of 2014, with a high probability of this being signed after three months. He said that the spread between what the AstraZeneca board said and what Pfizer wanted to pay was very small. There is a high probability that shareholders of both the companies wanted this merger to happen.
Pfizer did not reply when it was asked the question of whether it would again try to purchase AstraZeneca after the board of the UK Company rejected the US Company’s 55 pounds per share offer. If talks are to restart, AstraZeneca will need invite Pfizer for discussions or the latter must wait for at least six months to initiate a new bid.
According to Ian Read, Chief Executive Officer, Pfizer, the American drug making giant continues to hold the belief that its final proposal represented complete value and was a compelling proposition. He reiterated that the transaction would greatly help the existing strategy of the company.
Hultard is of the opinion that Pfizer has lukewarm success with its research and is angling for a deal. He believes that Read has invested his personal prestige and credibility in the process and the failure of the deal will be a large setback for him.
A public debate by both companies has raised expectations when it comes to the deal. The British drug maker has bet on a new cancer drug, the experimental medicines Pfizer wants in its product portfolio.