Shares in AstraZeneca (AZN.L) have rocketed after US rival Pfizer confirmed it had made a tentative £58.8 billion bid for the pharmaceutical business.
AstraZeneca surged by £5.94, or 14.6%, to £46.74 as Pfizer confirmed reports that first featured in the Sunday Times that it had approached AstraZeneca over a takeover, only to be rebuffed. It added that it had made a fresh approach last week seeking to renew discussions, only to receive a further rejection. The jump in Astra shares has helped to drag the FTSE 100 27 points, or 0.4%, higher, at 6,712.
‘Pfizer confirms that it previously submitted a preliminary, non-binding indication of interest to the board of directors of AstraZeneca in January 2014 regarding a possible merger transaction. After limited high-level discussions, AstraZeneca decline to pursue negotiations,’ Pfizer said in a statement to the market.
‘In light of recent market developments, Pfizer contacted AstraZeneca on 26 April 2014 seeking to renew discussions in order to develop a proposal that could be recommended by both companies to their shareholders. AstraZeneca again declined to engage. Pfizer is currently considering its options with respect to AstraZeneca,’ it added.
Pfizer said its offer had valued AstraZeneca at £46.61 a share, a 30% premium to its £35.86 price on 3 January. Shares have now risen above that as investors anticipate a firm bid from Pfizer.
Pfizer has said any future bid would be based on the undisturbed price on 17 April, before news of its approach broke, prompting a jump of over 7% in Astra shares. A 30% premium on that price would value Astra at £49.15 per share.
Liberum analyst Naresh Chouhan said a deal at that price would be unlikely because AstraZeneca would be ‘unwilling to accept' and Pfizer would ‘not want to go hostile’ and suggested a price closer to £60 would offer good value for Astra shareholders. Analysts at Barclays said Pfizer could make a bid of up £56 per share before the price began to offset any earnings boost.
BG Group (BG.L) was the biggest faller, dropping 34p, or 3%, to £11.12 as the oil and gas group announced the shock departure of boss Chris Finlayson due to personal reasons, and issued disappointing new guidance over 2014 production figures.