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In response AstraZeneca said it would have to consider a compelling offer but accused Pfizer of an “opportunistic” proposal with a ploy to cut taxes that risked its reputation.
Pascal Soriot, the French-born boss of AstraZeneca, came out fighting after Pfizer’s chief executive Ian Read made clear the New York-based group would not rule out a hostile bid if Britain’s second-biggest drugmaker did not enter merger talks.
Having warned that AstraZeneca could wither without its financial muscle, Pfizer expressed its frustration at being rebuffed, and said on Tuesday that working with the UK company’s board could help deliver “optimal deal terms” which AstraZeneca could recommend to its shareholders.
Soriot — who appeared after Read to answer questions from a parliamentary select committee — said Pfizer’s proposal risked disrupting its research and development work and delaying getting life-saving new drugs to market, as well as undervaluing the business.
“What will we tell the person whose father died from lung cancer because one of our medicines was delayed — and essentially was delayed because in the meantime our two companies were involved in saving tax and saving costs?” he asked lawmakers.
Pfizer’s plan to cut its tax bill by re-domiciling to Britain if it buys AstraZeneca also posed a reputational risk, Soriot added.
“The proposed tax inversion structure, we are afraid, could generate substantial controversy and potentially delay this merger and potentially impact the reputation of our company.”
AstraZeneca rejected Pfizer’s May 2 cash-and-stock offer worth £50 a share and said it had a bright future as an independent business. But by midday on Tuesday its shares had risen 1.5 per cent on anticipation it would have to consider another proposal.
“If Pfizer continues to aggressively pursue the deal by raising the price, then AstraZeneca’s board would have to little choice but to engage,” said Ketan Patel, an analyst at Ecclesiastical Investment Management, a holder of AstraZeneca shares. Pfizer is widely expected to come back with a sweetened offer for AstraZeneca this week, although people with knowledge of the matter said it was likely to wait until after the parliamentary hearings to make any new move. Both chief executives, who gave confident performances, will appear before another panel today to answer questions about the science aspects of the deal.
“Engagement would provide AstraZeneca management with the opportunity to provide Pfizer a better understanding of the business and its prospects, and the credible basis for their new long-range targets,” the US company said in a statement early on Tuesday. “Pfizer will continue to be disciplined on price.”
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