Pfizer: 'yep, we tried to buy AstraZeneca - and we're going to try again'

The drugs company has confirmed what everyone already knew: that it offered £46 per share for its British-Swedish rival in January.

by Emma Haslett
Last Updated: 02 May 2014

It's the worst-kept secret in pharmaceuticals: this morning, drugs giant Pfizer confirmed that at the beginning of this year, it tried to buy slightly less giant drugs company AstraZeneca. Apparently it offered £46.61 a share, just under a third higher than the company's then-share price of £35.86.

But AstraZeneca's board was having none of it, and on January 14, Pfizer gave up - only to contact the board again on April 26 'seeking to renew discussions'. Again, AstraZeneca's board 'declined to engage'. Now Pfizer says it is considering a third offer, 'in which AstraZeneca shareholders would receive a significant premium' for their shares, in a cash and shares transaction. Not only would they make some money, they'd also become shareholders of the world's largest research-based pharmaceutical company.

Why is Pfizer so desperate to get its paws on its European rival? A couple of reasons. Firstly, AstraZeneca is particularly strong in the relatively new field of cancer immunotherapy - boosting the body's immune system to fight tumours. The field may have been developed relatively recently, but it's one of the fastest-emerging ways to fight cancer - an Pfizer clearly feels there's a lot of scope for growth.

Secondly, Pfizer has a cash pile of almost $47bn sitting in various bank accounts around the world. Bringing that cash back into its native US would cost it a huge amount. Were it to acquire a company based in, to pick a random example, the UK, and move its HQ there, it could stand to save billions (although it's pretty unlikely).

By the sound of it, the AstraZeneca board isn't totally against the idea - it's just keen to make sure this is a merger of equals. Although whether anything is a merger of equals these days is another question. Particularly given the fact its market cap is less than half of Pfizer's.

It would be unfortunate for the UK as a centre of drugs research if Pfizer was successful. GSK may be technically a British company, but it's mainly based in the US - and we know Pfizer isn't particularly interested in boosting British jobs, given that it closed its research centre in Sandwich, with the loss of thousands of jobs, in 2011. Last year it closed its other centre in Alderley Park, in Cheshire. The likelihood is that if Pfizer did buy AstraZeneca, it would move most of its jobs to the US.

Meanwhile, elsewhere in the exciting world of healthcare, Reckitt Benckiser may find out this week whether or not its $13.5bn (£8bn) offer for the healthcare division of Merck & Co has been successful. The deal may not be as straightforward as Reckitt had hoped, though: word on the street is that German group Bayer has submitted a rival offer, although Reckitt reckons a deal the German company would create competition issues. It's still all to play for, though.

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