AstraZeneca rejects Pfizer's third takeover offer

Pfizer's plan of making the world's-biggest acquisition in the pharmaceutical industry was dashed today after its target AstraZeneca, Britain's second-largest drug company, rejected the US drug giant's latest - and final - $118.8 billion (£70 billion) merger offer, making it the the rejection in as many weeks.

Leif Johansson, chairman, AstraZeneca (left) and Ian Reed, CEO, PfizerThe London-based company said Pfizer's offer still falls short of AstraZeneca's value as an independent science-led company and brings uncertainty and risks for its shareholders

The rejection sent AstraZeneca's shares tumbling by 14 per cent to £41.48 in early trades today after closing at £48.23 over the weekend.

The rejection came hours after Pfizer raised its cash and stock bid by 15 per cent to $118.8 billion and said that the revised offer was final. (See: Pfizer raises bid for AstraZeneca to $118.8 bn, says latest offer is final).

AstraZeneca chairman Leif Johansson said that the company's board had on 17 May rejected a 16 May £53.50 per share offer and had made it clear to Pfizer on 18 May that the price at which the board of AstraZeneca would be prepared to recommend would have to be more than 10 per cent above the £53.50 per share offer or 58.85.

Johansson said that without prior notice Pfizer announced its final proposal to the market, and added that though the revised offer was a "minor" improvement'', it "continues to fall short of the board's view of value and has been rejected.''

Ian Read, CEO and chairman of Pfizer, said that the latest offer was "compelling" for AstraZeneca shareholders and that a merger is "in the best interests of all stakeholders."

Speaking to the BBC's News Channel, Johansson said the deal had a big execution risk and would take too long to close, creating uncertainty, particularly over Pfizer's proposed tax inversion and regulatory clearances.

''The business operating model and segmentation which would allow AstraZeneca to deliver on its research and development pipeline and prospects; and which would protect and preserve its culture of science and innovation, especially given the likelihood of material cost savings and research and development reductions,'' the Anglo-Swedish company said in a statement.

Pfizer has proposed that the merged company's headquarters would remain in New York, but the company would be domiciled in the UK for tax purposes.

AstraZeneca said that Pfizer's tax-driven inversion structure, which is a key part of its proposal, has already been the subject of intense public and governmental scrutiny, particularly in the US, and AstraZeneca believes this structure brings increased uncertainty as regards the delivery of value for its shareholders.