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View the article online at http://citywire.co.uk/wealth-manager/article/a752151

Have AstraZeneca's shareholders blown it?

by Elsa Buchanan on May 20, 2014 at 07:24

Have AstraZeneca's shareholders blown it?

In a new twist to this week's 'will they, won't they' saga, AstraZeneca rejected Pfiser's fourth and ‘final offer’.

The healthcare group turned down a final offer for the company by rival Pfizer saying that the value of £55 per share, or £69.4 billion, ‘undervalues the company and its attractive prospects’.

Following the rejection of the mixed cash and equity offer, shares in AstraZeneca dipped 11% on Monday and fund managers appear to have grown sceptical.

Peter Garnry, head of equity strategy at Saxo Bank, put it simply: 'AstraZeneca shareholders blew it.'

'[The final offer] was reportedly too low for AstraZeneca, which had previously stated that its board would only consider an offer of at least £58.85 per share.'

Under British law, Pfizer has until 26 May to persuade AstraZeneca to entertain their final offer; otherwise the company will be prohibited from making another proposal for six months.

Garnry believes it is during this period that AstraZeneca 'would be under enormous pressure from shareholders to prove itself and its decision to reject Pfizer’s latest offer'.

Pressure on Astra ahead of deadline

Citywire + rated Neil Veitch and James Cooke, managers of the SVM World Equity fund, say the £55 per share bid 'looked a fair offer' .

While the pair reiterate the need to reach an agreement before the UK takeover law deadline, Cooke also reminded investors Pfizer has stated it would not pursue a hostile offer targeted towards AstraZeneca’s shareholders to secure a deal.

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2 comments so far. Why not have your say?

CoeurDeLion87

May 20, 2014 at 09:28

There seems to be a real mess in UK Takeover rules these days. Back in the '80s when Hanson, BTR & Hawley Leisure were all aggressively active in paper/cash takeovers the rules were pretty clear. All deals had to be transparent, reported to the LSE in a timely and proficient manner and 'bids' invariably had to be communicated directly with shareholders in writing. I fear the current malaise in UK is far from equitable to ALL shareholders irrespective of size. Like many things in British society there has been a steady creep into dishonesty and stealth.

According to TV reports y'day there have been 4 bids. The first was on 5th January £46.61, then 2nd (?) May £50=, then £53.50 then Sunday's £55+. Dates and details E&OE. The first point to make is that ANY bid must be made during LSE market hours. Pfizer and their advisers, as well as AZN too, blew this outside market hours. Second point is that the 'approach' on 5th Jan was NOT relayed to market. In Redmayne-Bentley's Equity Insight of 1st May they write "Hard on the heels of XXX came confirmation of Pfizer's long rumoured bid approach for AZN" and later in same EI they write "News broke this week that....Pfizer had contacted AZN over a possible bid"

So it seems that there is a lot of confusion and shenanigans over who sees what when & why. The role of LSE & FCA is to ensure that ALL shareholders receive fair access to market and company information at all times. In big global corporate takeovers these days it would appear that institutions get unfair advantages on information.

Finally the opaque nature of Takeover Panel rules need investigating too. Further tightening of the definition of 'Indicative', 'final' and a host of other procedures need looking at.

My Twiiter conversation with Ian King of Sky y'day throws further light on this confusion-

CoeurDeLion ‏@Coeurdelion87 · 19h

What do TakeOver rules say about shifting bid from INDICATIVE to FORMAL & then unwinding FINAL bit? Answers on postcard @iankingsky

Ian King ‏@IanKingSky · 18h

@Coeurdelion87 Good question. Offer is indicative but the Panel tell me that 'Final' still means 'Final' in this instance.

Louise Cooper in her great analysis reflects "Reading through the AZN release suggests that the Board may be willing to negotiate with Pfizer if its Board is willing to move up to £58.85" and this is the same price that your article above that Garnry of Saxo mentions. Whether it's the same reference who knows?

Q. When is a bid NOT a bid and when is it indicative, non-indicative, phaseable & 'final'?

Some clarity and transparency here might just assist ALL shareholders. Takeover Panel? Treasury Select Committee? LSE? FCA? Uncle Tom Cobbly?

By the way in case anyone hasn't notice Directors dealings in Pfizer a few months ago looks like a great arbitrage.

Oh for the days of Lord Hanson!

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Gavin Palmer

May 25, 2014 at 06:58

In terms of value serial acquirers only buy cheap, so it depends whether you prefer value for the future over getting a serial takeover and financial geared system that will fall off a cliff when the party stops. Other than those playing the takeover premium for value investors I wouldn't want Pfizer and the rerating for Astra has started thanks to the publicity. All helpful. Await the efforts of the bankers to try to gain their fat fees by pushing it, wonder when they will stop as the losses mount and who leaves first?!

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