Boston, MA 04/28/2014 (wallstreetpr) – AstraZeneca plc (ADR) (NYSE:AZN), the British pharmaceutical giant, is not in any hurry to enter a deal that seemingly undervalues its prospects. But that position is not healthy for the U.S. pharmaceutical giant Pfizer Inc (NYSE:PFE).
Pfizer has renewed its efforts to takeover AstraZeneca in a deal that could easily be among the biggest in the industry and create one of the biggest drug companies in the world.
While Pfizer is salivating for a deal with AstraZeneca and is ready to offer as much as $100 billion, AstraZeneca believes it is worth much more than that. Talks between the two companies collapsed or were suspended in January.
However, in the latest move, Pfizer has not only renewed its efforts in pursuing a deal with AstraZeneca plc (ADR) (NYSE:AZN), but has also gone public with its intentions. The move to go public over its acquisition bid for AstraZeneca puts the British drug maker in a position that might force it to enter negotiations. As long as the matter has been officially confirmed as it stands now, shareholders reading benefit in the transaction might start piling pressure on AstraZeneca to come to the negotiation table, and that will be a score for Pfizer.
AstraZeneca declines
The latest bid contact was made on Saturday, April 26. However, AstraZeneca plc (ADR) (NYSE:AZN) stuck to its guns as was the case in January, declining to engage in the talks. However, the company also broke its silence over the matter and said that the price that Pfizer put on the table in January significantly undervalued the company. Therefore, in the absence of something new and attractive, the company will not be willing to talk about the bid.
That means that Pfizer might have to up its offer if it needs to get the talks going.
The January deal valued shares of AstraZeneca at about 30 percent premium at that time. However, the share-price has increased since January, and if a premium of the 30 percent were to be attached on the latest bid, it would mean a higher takeover price for Pfizer.
Adjusting to market realities
Consolidation and the race to protecting potential revenue loss due to expiration of patents can be seen creating an acquisition buzz in the drug industry. Efforts by Pfizer to acquire AstraZeneca plc (ADR) (NYSE:AZN) are just among the many attempts by deep-pocket pharmaceuticals to protect their revenue and profits amid potential competition as blockbuster drugs lose market exclusivity.
