AstraZeneca Shareholders Pile On Pressure To Resume Pfizer Talks

Pfizer's Bid To Gobble Up UK Rival AstraZeneca May Not Be Over
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JOHANNESBURG, CAMBRIDGESHIRE - MAY 15: Viagra drugs made by Pfizer and Nexiam (Generic name - Esomeprazole) made by the pharmaceutical firm AstraZeneca are displayed in a Pharmacy on May 15, 2014 in Johannesburg, South Africa. The proposed takeover by American pharmaceutical giant Pfizer of its British rival AstraZeneca has led to the UK Business Secretary Vince Cable addressing Parliament to affirm the government's commitment to securing British science jobs. (Photo by Christopher Furlong/Get
Christopher Furlong via Getty Images

Hopes for Pfizer's apparently doomed attempt to take over AstraZeneca flickered back to life today on a report that one of the largest shareholders in the UK firm had urged it to engage in talks.

Shares climbed 2% on the speculation, making Astra for a time the biggest climber on London's FTSE 100 Index - despite a statement hours earlier by the firm that appeared to snuff out any lingering chance of a deal.

The UK-based group has repeatedly spurned the advances of Viagra maker Pfizer and after an intense weekend of exchanges between the two companies rejected an improved final offer of £69 billion as at least £5 billion too low.

It appeared to put an end to weeks of intensifying rhetoric over a possible deal ahead of a deadline next Monday, amid increasing concern over the impact of likely cost-cutting on UK jobs and the country's science base.

5 reasons people are worried about Pfizer
Hundreds of job cuts after taking over Warner Lambert(01 of05)
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Pfizer snapped up Warner-Lambert in 2000, makers of the anti-cholesterol drug Lipitor, in a deal worth around $111.8 billion, making it the world's second biggest phamaceutical firm. Soon after, it was announced that hundreds of workers would lose their jobs, equating to 10% of the combined workforce. (credit:(Photo by Chris Hondros/Getty Images))
And again at Pharmacia (02 of05)
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Pfizer acquired Pharmacia, securing drugs like the painkiller Celebrex, in a $60 billion deal back in 2002.After the merger, a site in Redwood City, California, was swiftly shut - with the loss of over 300 jobs. In 2008, 275 job cuts were announced at the Kalamazoo manufacturing facility.
And yet more losses when they bought Wyeth(03 of05)
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Pfizer paid $68bn for Wyeth, the US maker of Effexor, an antidepressant, and Prevnar, a child meningitis vaccine in 2009.The US drug giant then unveiled nearly 13,000 job cuts in the first year after the process and the closure of eight factories. By the end of 2013, 33,500 jobs had been cut. (credit:Photo by Mario Tama/Getty Images)
And more job losses after buying King Pharmaceuticals(04 of05)
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After buying pain-drug maker King Pharmaceuticals for $3.6 billion in 2010, Pfizer confirmed eight months later that it’s cutting 130 manufacturing and 16 logistics positions at its plant in Bristol, Tennessee. Not the biggest number, but a major blow in a town of roughly 26,000 people.
Pfizer's record in the UK is hardly any better(05 of05)
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The drugs giant sold its research and development facility in Kent to a private consortium in 2012, resulting in 1,500 jobs being lost. (credit:Gareth Fuller/PA Archive)

But the rejection knocked as much as 15% off the company's value and led some institutional shareholders to voice their discontent publicly, though others were supportive of Astra's decision.

Today's rise in the share price pushed them above £44 each, a value still well below Pfizer's £55 valuation.

It came after a Wall Street Journal report that Legal & General, which owns a 3.5% stake in Astra, had written to the board asking it to engage in talks with Pfizer. Legal & General declined to comment.

Yesterday Schroders, which owns a 2% chunk of the UK firm, had expressed disappointment at the "quick rejection" as well as the decision by the Pfizer board to describe its offer as "final" - limiting any further room for manoeuvre.

"As long-term shareholders, we are strong believers in AstraZeneca and the potential for its innovative growth pipeline," the fund manager said.

"However, given the increase in the offer we would encourage the AstraZeneca management to recommence their engagement with Pfizer."

Fidelity Worldwide Investment, another major shareholder, took a different view.

Dominic Rossi, chief investment officer for equities, said: "I think Astra did the right thing. I don't think that Pfizer was a suitable partner. It was motivated by tax and finance considerations.

"The Astra board has taken a very difficult decision. They understood in rejecting the offer they would be criticised by some shareholders. We will now have to wait two to three years to see whether they were right. With a little luck they could well be."

Last night, Astra issued a statement to make it clear there was no possibility of any proposal from Pfizer being increased, even with Astra's approval, before a deadline on 5pm on May 26 - appearing to slam the door shut on a deal.

The timetable came into force at the end of last month when the takeover attempt was formally launched by Pfizer.

Its efforts saw Scottish-born chief executive Ian Read being subjected to a grilling by MPs when he was forced to defend the company against charges that it was like a "praying mantis" and a "shark that needs feeding".

There has also been criticism over plans for the newly merged drugs giant to be redomiciled for tax purposes in the UK while retaining headquarters in New York.