Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

Have AstraZeneca's shareholders blown it?

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.

'Until then there is a chance that major AstraZeneca shareholders, many of whom Pfizer are said to have spoken to during the process so far, could encourage the AstraZeneca board to reconsider.’

While analysts at Citigroup and Deutsche Bank reiterated a 'buy'  and 'hold' rating on shares of AstraZeneca respectively last week, the latest recommendation came from Credit Suisse before the weekend, with a 'neutral rating. Societe Generale also issued a 'hold' rating on the stock.

Still, closing prices on Monday showed AstraZeneca was down 11.11% on the day at £41.21 - far from the £55 offer - down as much as 14.5% earlier. Meanwhile, the stock is still up 18.11% over one year versus 1.11% gain on FTSE 100.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Related Fund Managers

Neil Veitch
Neil Veitch
133/340 in Equity - Global Equities (Performance over 3 years) Average Total Return: 40.33%
Citywire TV
Play Picton: the UK property hotspots for rental income

Picton: the UK property hotspots for rental income

Picton Property Income CEO Michael Morris reveals how he is planning to ride the ‘ripple effect’ as UK economic growth spills out from the capital across the country.

Brewin's Foster talks financial crisis MkII with Allianz's Riddell

Brewin's Foster talks financial crisis MkII with Allianz's Riddell

This week Brewin Dolphin's head of research talks to Mike Riddell, fund manager at Allianz Global Investors, about the forces driving bonds markets in a tumultuous week for markets.

Play Henderson's Hermon: how to be defensive in smaller caps

Henderson's Hermon: how to be defensive in smaller caps

Hermon, who manages the Henderson Smaller Companies trust, talks about he will tackle a 'challenging' 2016.

Your Business: Cover Star Club

Profile: 'what we are doing at Mosaic is Darwinian'

Profile: 'what we are doing at Mosaic is Darwinian'

The changes in financial services over the last few years may leave some destitute warns Marco Sambucci of Mosaic Money Management

Wealth Manager on Twitter