NEW YORK CITY: Pfizer said on Monday (Tuesday in Manila) that it remains keen to acquire AstraZeneca but hinted at a hostile takeover campaign if the British company continues to rebuff its offer.
Pfizer chief executive Ian Read said he remains convinced the deal will benefit Pfizer and AstraZeneca, both of which have suffered significant patent expirations in recent years.
“We are very disappointed with their unwillingness to engage in conversations and believe it is in the best interest of both companies and AstraZeneca and Pfizer shareholders that we pursue a friendly negotiated transaction that can be recommended by both our boards,” Read told analysts.
Asked when Pfizer would consider going directly to shareholders, Read said, “we remain considering all our options on how we progress these discussions.”
On Friday Pfizer boosted its offer price by 7.3 percent to £50 ($84.32) a share, taking the deal to a value of $106 billion, but AstraZeneca quickly rejected the offer, calling it “inadequate”.
Read’s remarks came as Pfizer reported a 15.3 percent dip in first-quarter profits to $2.3 billion, a result that translated into 57 cents per share, two cents better than expectations.
Revenues for the largest US pharmaceutical company by assets fell to $11.4 billion from $12.4 billion, well below analyst forecasts of $12.1 billion.
The results were the latest to show the effects of expiring patents, which have hit sales of blockbuster drugs like Viagra, the sexual-dysfunction drug, and anti-cholesterol treatment Lipitor.
The report “reflects weakening of many core, mature franchises,” said a note from BMO Capital Markets.
Although the company reported progress on some new drugs in development, this news “did not translate to clear-cut commercial value,” BMO said.
“We continue to belive that a merger with AstraZeneca could meaningfully improve Pfizer’s long-term prospects; however, of course that depends on how much Pfizer ends up paying.”
On April 28, Pfizer disclosed that it approached AstraZeneca in January about a takeover valued at about $99 billion, but that the British company declined to pursue negotiations. Pfizer tried again in late April to ignite talks, but was rebuffed once more.
Pfizer said the combined company would deliver an expanded product pipeline, deep potential cost cuts and significant tax savings from making Britain its home base for tax purposes.
On Friday, Pfizer raised its bid to about $106 billion and pledged to British government officials that the company would complete AstraZeneca’s proposed research and development facility in Cambridge and would base 20 percent of the new group’s research staff in Britain.
But the British company rejected that offer too, saying the terms “substantially undervalue AstraZeneca and are not a basis on which to engage with Pfizer.”
Read said Pfizer had waited until April to revive its campaign to wait for positive clinical results on a pair of major drugs in development, palbociclib, which treat metastatic breast cancer, and prevnar, a vaccine against pneumonia.
“We did this from a position of strength,” he said.
Read emphasized that an AstraZeneca deal is “a way of accelerating an already good strategy,” but that the company is also well-positioned if a deal does not happen.
“We’re doing this because we see an opportunity to create additional value from this acquisition or combination, not because we feel any negativity towards our present strategy, which we feel is very strong,” he said.
Shares in Dow member Pfizer were down 2.51 percent at $29.99 in early-afternoon trade.