AstraZeneca shares down after Pfizer walks away

A woman walks outside AstraZeneca headquarters in Macclesfield, northwest England. Analysts say now that the Pfizer bid has gone, AstraZeneca would need to deliver on its aggressive 2023 targets. - AFP

LONDON: Shares in AstraZeneca fell 2.3% after US drugmaker Pfizer said it would not make a formal bid to acquire its smaller British rival.

Pfizer’s decision – announced on Monday during a public holiday – had been widely expected after a rejection by AstraZeneca’s board of its final offer of £55 a share.

Under British takeover rules, AstraZeneca could reach out to Pfizer in three months and Pfizer could take another run at its smaller British rival in six months’ time, whether it is invited back or not. But an immediate deal is off the agenda.

Pfizer’s final offer was at a price that many analysts and investors had previously suggested would bring AstraZeneca to the table for serious negotiations.

But in rejecting an earlier offer of £53.50 as undervaluing the company, the British group indicated that it needed a bid more than 10% higher, or at least £58.85 per share, for its board to consider a recommendation.

Pfizer had urged AstraZeneca shareholders to agitate for engagement and several expressed disappointment at its intransigence, though others – encouraged by AstraZeneca’s promising drug pipeline – backed the standalone strategy.

The shares fell back to £42.29 by 0820 GMT yesterday, still a premium to the undisturbed price of £37.82 before Pfizer’s bid interest was first reported in mid-April.

Several brokerages, including Societe Generale, Panmure Gordon and Kepler Cheuvreux, cut their recommendations or price targets for AstraZeneca after Pfizer’s decision to abandon its attempt to buy the British company.

SocGen analyst Stephen McGarry, who downgraded the stock to “sell” from “hold” and set a price target of £36 a share, said the onus was now on AstraZeneca to deliver on its bullish forecasts for sales to grow 75% to US$45bil by 2023.

Now that the Pfizer bid has gone, AstraZeneca would need to deliver on its aggressive 2023 targets, he said in a note.

He added that SocGen believed the targets were likely to be “unattainable without AstraZeneca adding to its revenue and profit stream via M&A (merger and acquisition) activity”. — Reuters