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 People with direct knowledge of the situation said Pfizer has been
reviewing different takeover scenarios with a U.S. investment bank
ahead of Nov. 26, when it is allowed to renew its pursuit of
AstraZeneca under UK takeover rules.
This includes a close analysis of the benefits of a tax-saving deal
to buy Dublin-based generic drugmaker Actavis <ACT.N>, which has a
market value of around $64 billion against AstraZeneca's $94
billion.
"I am pretty sure that no-one at AstraZeneca is ready to agree a
friendly deal," said a banker who met with the British company
recently and has insights into Pfizer's strategy.
"The hurdles are now getting bigger and bigger. A deal would take
longer and would be more expensive. In that context, Actavis is
becoming more attractive, although it would not be a great story,"
he added, explaining Actavis would not offer the same synergies and
opportunities in oncology as AstraZeneca.
Pfizer's Chief Executive Ian Read told analysts in October that the
company remained interested in lowering its tax bill, despite a U.S.
clampdown on companies using so-called inversion deals to move their
tax base overseas.
"We still believe that on a case-by-case basis there is meaningful
value to be had from inversions," Read said.
AstraZeneca Chief Executive Pascal Soriot, however, said last week
that the risks of inversion deals had increased markedly since the
U.S. rules changes, as evidenced by the collapse of AbbVie's <ABBV.N>
$55 billion plan to buy Shire <SHP.L>.
Many investors agree with that reading.
"I would not put it (the chance of a new Pfizer bid for AstraZeneca)
at more than a 20-30 percent probability," said Norbert Janisch,
portfolio manager at Raiffeisen Capital Management in Vienna, which
is a shareholder in AstraZeneca.
DEAL HUNGRY
AstraZeneca has been buoyed recently by progress with new drugs but
its shares, which are trading 25 percent above the level before news
of Pfizer's interest emerged in April, still contain a takeover
premium.
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The political difficulties of staging what would be the biggest ever
foreign takeover of a British company also remain considerable, with
a general election in May 2015 that the opposition Labour party,
which opposed Pfizer's earlier bid, could well win.
It all means Pfizer would, once again, have to try for a friendly
deal, and analysts doubt AstraZeneca's board would come to the table
for less than 60 pounds a share, against 47 pounds at present.
Pfizer's problem is that the tax advantages of buying AstraZeneca
are now considerably less than in May, when its 55 pounds-a-share
offer was rejected.
The U.S. group's need for a deal remains, however, given its
vulnerability to cheaper generics and its relatively weak line-up of
experimental medicines, which is spurring Read and his lieutenants
to look at other options.
"The truth is that Pfizer has never stopped looking at targets in
Europe after the AstraZeneca debacle," said one banker familiar with
Pfizer's strategy.
AstraZeneca, meanwhile, plans to set out its stall at a Nov. 18
investor day. This will include an update on experimental drugs in
the hot research area of cancer immunotherapy, which involves
boosting the immune system to fight tumours.
(Additional reporting by Anjuli Davies and Carolyn Cohn; Editing by
Ben Hirschler and Mark Potter)
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