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AstraZeneca Shares Up 25%

US drugs giant Pfizer has confirmed that it has now twice approached British peer AstraZeneca PLC with a takeover proposal - and the share price has soared

Morningstar News Team 28 April, 2014 | 10:17AM

US drugs giant Pfizer (PFE) this morning confirmed that it has now twice approached British peer AstraZeneca (AZN) with a takeover proposal, and is considering its options after being rebuffed both times.

In a statement, Pfizer said it first approached AstraZeneca with a cash and shares offer that valued the British company's shares at £46.61, or $76.62, each on January 5. It said discussions about the approach were limited and ended on January 14.

The US company then contacted AstraZeneca again on Saturday in the hope the sides could come up with a takeover proposal that both companies would put to their shareholders, but AstraZeneca again declined to engage with Pfizer, the US company said.

"As in its previous proposal, Pfizer is considering a possible transaction in which AstraZeneca shareholders would receive a significant premium for their AstraZeneca shares, to be paid in a combination of cash and shares in the combined entity," Pfizer said.

It said it would be offering a "significant" premium to AstraZeneca's share price on April 17 and a substantial cash payment if it does go ahead with an offer. AstraZeneca's shares closed at 3,779 pence that day, and were trading up 14% at 4,659.00 pence Monday morning, the biggest gain on the FTSE 100.

Michael Clark, Portfolio Manager of Fidelity MoneyBuilder Dividend and Fidelity Enhanced Income funds has held Astra Zeneca in the income funds since 2009, when market sentiment was very negative around the company.

“The shares began to rise from October last year, and now Pfizer has expressed an interest in buying the company the shares have risen to £46.70,” said Clark. Our average purchase price was £29. In my view, the developments at Astra Zeneca over the past few years show how important it is to invest when valuations are attractive even if general market sentiment is negative at the time.”

AstraZeneca shareholders would become significant shareholders in the combined company and participate in significant value creation opportunities, including benefiting from the potential growth opportunities and operational and financial synergies that the combination of two complementary global pharmaceutical companies would be expected to generate a Pfizer spokesperson confirmed.

Pfizer said it hopes a deal can still be done, and it if does come off, then the two companies would be combined under a new UK-incorporated holding company listed on the New York Stock Exchange.

A spokesperson for AstraZeneca said that the company had no comment on Pfizer's statement.

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Securities Mentioned in Article
Security NamePriceChange (%)Morningstar
Rating
AstraZeneca PLC4,913.50 GBX-0.44
Pfizer Inc36.64 USD0.16
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