Shares in US drugs giant Pfizer have slumped by 14 per cent after the company's £69bn takeover offer was rejected by the board of AstraZeneca.
Last night Pfizer revealed that it had raised its offer for AstraZeneca to £55 a share, after having an earlier offer of £53.50 turned down on Friday night.
Chairman of AstraZeneca Leif Johansson said the price at which the board would be prepared to make a recommendation would have to be 10 per cent higher than Pfizer's Friday proposal. Johansson branded Pfizer's final offer as "inadequate".
The company had failed to convince AstraZeneca that there was a compelling strategic, business or value case for the takeover.
The AstraZeneca board said Pfizer's pursuit of the company appeared to be driven by the financial benefits that could be delivered to shareholders as a result of cost cutting and tax minimisation.
However, the AstraZeneca chairman said he does not know whether this marks the end of the road for Pfizer's interest. Speaking to the Today programme, Johansson said "I have no idea, this has been going on for some time, and in very deep engagement over the whole weekend".
Dr Mick Cooper, analyst at Edison Investment Research commented "AstraZeneca will have six months to demonstrate that it was right to reject Pfizer's offer, or face the prospect of a fresh approach".
The rejection will make it difficult for Pfizer to continue its interest as it has made the offer conditional on the support of the board. Seemingly the only hope left for Pfizer would be an open revolt of AstraZeneca shareholders.
Pfizer has been equally unimpressed with how AstraZeneca has conducted itself during the process.
Pfizer's chief executive Ian Read, said in a statement last night:
We have tried repeatedly to engage in a constructive process with AstraZeneca to explore a combination of our two companies. Following a conversation with AstraZeneca earlier today, we do not believe that the AstraZeneca board is currently prepared to recommend a deal at a reasonable price.
The Labour party has welcomed AstraZeneca's decision, with shadow business minister Chuka Umunna commenting "I very much welcome the rejection of the Pfizer's final offer by the board of AstraZeneca. The right decision for the company for the company and for the country".