LONDON—Shares in Anglo-Swedish drugmaker AstraZeneca jumped 15 per cent after U.S. pharmaceutical firm Pfizer offered to buy the company for around $100 billion.
AstraZeneca PLC said it concluded that the proposal “very significantly undervalued AstraZeneca and its prospects.”
Pfizer, the maker of Viagra, said that AstraZeneca rejected an initial approach in January valuing the company at about 59 billion pounds ($100 billion). The cash and shares deal would represent a 30 per cent premium on AstraZeneca’s closing share price of 35.26 pounds on Jan. 3, around the time the offer was made.
Another effort to revive discussions took place Saturday, though Pfizer said Astra did not engage. Pfizer remains interested and is confident a deal is possible, issuing a statement to the markets underscoring the potential advantages.
“Pfizer believes the strategic, business and financial rationale for a transaction is compelling,” the company said in a statement.
The move comes as drug makers leverage lower interest rates in a spate of mergers and acquisitions.
Last week Swiss drugmaker Novartis AG agreed to swap its vaccine business for GlaxoSmithKline PLC’s cancer drug unit and sold its veterinary drug arm to Eli Lilly and Co.
Pharmaceutical companies are trying to boost sales and cut costs as many see revenue falter on increased competition from generic drugs and rising expenses for the development of new products.
Pfizer’s bid for AstraZeneca would mark the biggest-ever foreign takeover of a British business, and it is possible the Conservative-led government of David Cameron may take a position on the matter, particularly since it has taken an interest in bolstering the country’s biotech sectors.
“It would raise fears about the protection of AstraZeneca’s innovative research program in the U.K., especially given that Pfizer has already looked at the U.K. and decided to remove its own R&D operations,” said Sarah Main, the director of Campaign for Science and Engineering, an independent advocate for science and engineering in the U.K.
AstraZeneca is currently undergoing a major research and development re-organization to offset the expiration on patents for drugs like cholesterol medication, Crestor. The company has been reducing costs and trying to make research programs more productive.