Pfizer Courts AstraZeneca (Again) With $100 Billion Offer

The “on-again-off-again” courtship of British pharma AstraZeneca AZN by U.S. drugmaker, Pfizer PFE, was on again, according to a statement from Pfizer.

The renewed offer of almost $100 billion may, according to analysts, go over that amount.

Related: UPDATE: AstraZeneca Board Says Not Appropriate to Engage in Discussions with Pfizer, Says Pfizer Proposal Undervalues AstraZeneca

AstraZeneca rebuffed Pfizer’s $98.9 billion offer in January, saying it undervalued the company “very significantly.” The company also said Pfizer’s offer of 70 percent in shares and only 30 percent in cash was not acceptable and urged shareholders to take no action.

Dan Mahony of Polar Capital told Reuters, "My guess is it will go for somewhere between 50 and 55 (pounds a share)." Mahony added, "I doubt Pfizer will want to go completely hostile."

Acquisition of AstraZeneca would create two major values for Pfizer. First, there would be the boost to the company’s cancer drugs pipeline via AstraZeneca’s attractive suite of medicines in that space.

In addition, acquisition of AstraZeneca would let Pfizer keep large sums of cash abroad and avoid U.S. taxes. To underscore that strategy, in its statement Monday, Pfizer said it would reincorporate the combined company in Britain, maintain offices in both the U.S. and Britain, and continue to be listed on the New York Stock Exchange.

Pfizer’s latest offer came in about 30 percent higher than AstraZeneca’s share value at the beginning of the year before acquisition rumors drove stock prices higher.

Large pharmaceutical deals have become the norm lately, driven in part by a desire on the part of companies like Pfizer to increase revenue as major drugs lose patent protection. Buying out a proven winner could be less risky than pouring millions of dollars into R&D, especially if any resulting new drugs turned out not to be successful.

In Monday’s statement, Pfizer CEO Ian Read said, “We believe patients all over the globe would benefit from our shared commitment to R&D, which is critical to the future success of the pharmaceutical industry. A potential combination with AstraZeneca aligns with Pfizer’s current structure and fully supports its existing strategy to build world-class businesses.”

So far, AstraZeneca has not been overly impressed according to a source who spoke to The New York Times. According to the source, the AstraZeneca board viewed previous offers and approaches from Pfizer as opportunistic and ill timed.

Pfizer has until 5 p.m., London time, May 26 to make a firm bid for AstraZeneca.

At the time of this writing, Jim Probasco  had no position in any mentioned securities.