Boston, MA 05/02/2014 (wallstreetpr) – There seems to be no end to the merger drama between the New York based giant drug company Pfizer Inc. (NYSE:PFE) and the London-based pharmaceutical company AstraZeneca plc (ADR) (NYSE:AZN).
Pfizer seeks a merger deal with AstraZeneca. However, its bids are facing frequent challenges from the target company. While Pfizer initially made silent bids for the company with the first one reportedly coming in January, it recently went public over its intention to add the British drugmaker to its portfolio. According to analysts and pundits, the move to go public about the bid was to pile pressure on AstraZeneca to access the bid. However, if that truly was the calculation, Pfizer looks headed for embarrassment.
The company raised its bid offer from the previous $100 billion to $106 billion in the latest case. However, no soon had the media picked up the story than AstraZeneca fired a statement terming the new bid amount unacceptable.
The sweetened bid showed a 7 percent improvement from what Pfizer Inc. (NYSE:PFE) was initially willing to offer. According to Pfizer CEO Ian Read, the new offer was not only responsive in view of what is best for the shareholders of AstraZeneca, but also provided a sound foundation on which to move forward with the combination of the two companies.
However, AstraZeneca responded saying that the proposal was not only inadequate, but if accepted could dramatically dilute the value of existing shareholders. The company cited its rich product portfolio and pipeline that give it a strong momentum as a standalone company.
Opportunity in cancer market
In seeking a merger with AstraZeneca, Pfizer Inc. (NYSE:PFE) is keen to avoid revenue problems. The company is likely to face revenue problems given that many of its blockbuster drugs are about to lose their marketing exclusivity thus exposing it to generic competition. AstraZeneca has a product portfolio and pipeline that could easily secure the company’s future. Moreover, merger and acquisitions have become commonplace in the pharmaceutical industry as companies jettison underperforming assets to focus on mainstay products and promising markets and Pfizer is particularly after a promising investment.
Doing business in Europe
There are many reasons why Pfizer Inc. (NYSE:PFE) seems ready to pay any price for AstraZeneca. The company has a huge cash hoard held overseas that it would rather spend on acquisitions than bring back home. Bringing the money back home would attract a higher tax bill that the company is keen to avoid. Furthermore, incorporating in Europe would be an important thing for Pfizer as the continent offers somehow friendly tax environment.
