Bottom Line: No more games, but target will be hard to get

 
Elizabeth Fournier
AFTER four months of messing around behind closed doors, Pfizer’s flirtation with its UK target is now well and truly out in the open.

We now know exactly what the US giant wants from the deal (tax breaks that come with a UK domicile) and what AstraZeneca is looking for to make it happen (more money). It’s clear from yesterday’s statement that Pfizer is ready to get serious: not only has it forced AZ to issue a response, it’s also made it pretty obvious that there’s a higher offer waiting in the wings than the £46.61 per share that saw it rebuffed in January.

But now the US suitor has played its cards so openly, AstraZeneca – and its team of advisers ­­– have the upper hand. After the first approach was knocked back, Pfizer tried to play it cool, telling its prey it was no longer interested in a deal. That wasn’t true – and after more than a week of speculation the stakes have been pushed considerably higher, and AstraZeneca shares have now closed above Pfizer’s original bid.

So how high will Pfizer be willing to go to secure the savings it has identified from shifting its base to the UK? Analysts have suggested the firm could shell out as much as £56 per share before any cost savings are wiped out. With those kind of numbers on the table, it’s no wonder that AstraZeneca is being coy, but the advisers – lining up for a slice of the rumoured $240m in fees – certainly have an incentive to push this one forward.

Though it may be more interested in the tax benefits of a tie-up than a merger based on mutual desires, there’s no doubt that Pfizer is smitten. AstraZeneca should play hard to get for all it’s worth.

PFIZER’S PLANS FOR A DRUGS COCKTAIL

MONDAY 25 NOVEMBER 2013
Pfizer’s Ian Read contacts AstraZeneca (AZ) over a possible deal; AZ’s Leif Johansson rebuffs the approach but both sides agree to meet in New York on the first Sunday of the new year to discuss in person.

SUNDAY 5 JANUARY 2014
AZ and Pfizer meet in New York, where Pfizer tables a £58.8bn offer for the company.

SUNDAY 12 JANUARY
After a week of discussions, AZ officially rejects the offer.

WEDNESDAY 15 JANUARY
PF writes to AZ saying it is no longer interested in the business.

SUNDAY 20 APRIL
A story appears in the Sunday Times detailing the January discussions.

SATURDAY 26 APRIL
Read phones Johansson, saying Pfizer still wants to buy the company. He tells Johansson that both companies should issue a statement announcing they had entered in discussions.

MONDAY 28 APRIL
Pfizer issues a statement to the London stock market as it opens saying it wants a merger, forcing AstraZeneca into issuing a statement hours later.

MONDAY 26 MAY
Deadline for a firm offer to be made.

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