Astrazeneca’s £15bn gamble

 
Michael Bow
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THE DEAL IS OFF. SHAREHOLDERS ARE HURTING. NOW THE UK DRUG GIANT MUST PROVE THAT IT CAN DELIVER ON ITS PROMISES – AND FAST

UK DRUG giant Astrazeneca yesterday shut the door on Pfizer’s audacious £69bn takeover bid, splitting shareholders and piling pressure on bosses to live up to ambitious promises they have made on the future of the firm.

Shares in the company tanked 11 per cent after Astrazeneca rejected a final proposal of £55 a share for the FTSE 100 giant, cutting the value of the company to £54bn – around £15bn less than Pfizer was willing to pay to acquire the firm.

Astrazeneca’s chief executive Pascal Soriot and chairman Leif Johansson turned down the final bid after signalling to Pfizer it wanted at least £58.85 to begin negotiations.

The decision split Astrazeneca shareholders, with Woodford Investment Management and Aberdeen Asset Management backing an independent Astra. But it was a bitter pill for shareholders like Axa Investments and Jupiter Fund Management, which all expressed disappointment in the board.

Soriot will now have to deliver on promises made to investors during the takeover battle, including a forecast that the firm will increase revenues by 75 per cent over the next decade.

“The problem is he’s given us a level of expectation – and now he has to deliver on it,” one institutional shareholder in Astrazeneca told City A.M.

The potential deal, which has been rumbling since mid-April, is now likely to be over for at least six months unless shareholders can convince Astrazeneca to reverse its decision before next Monday’s deadline. Banks on the deal, who were set to collect up to $240m (£143m) in fees, will instead take home between $10m and $20m.

Pfizer’s shares rallied by 0.55 per cent in trading yesterday.

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