Analysts Still See AstraZeneca PLC As Viable Takeover Target

October 15, 2014

By Riley McDermid, BioSpace.com Breaking News Staff

A new poll of 66 investment analysts has found that some still view AstraZeneca PLC as a potential target for larger drugmaker Pfizer Inc. , despite a recent crackdown on tax inversion deals, the Financial Times reported this week.

The British drugmakers already snubbed an earlier Pfizer offer for the company at £55-per-share, saying in May that the bid substantially undervalued “the company and its attractive prospects.”

Still, hopes for a deal remain widespread on Wall Street.

Analysts with investment bank Jefferies said that any potential merger with Pfizer would see significant upside for AstraZeneca shareholders, because they could wind up controlling around 40 percent of the eventual entity.

“Given that Pfizer would likely have to return with a bid of at least £58.85 per share to initiate negotiations, this implies positive upside asymmetry against what we believe would be a worst case unaffected share price of circa £40 if it were clear that there was no chance Pfizer would return,” they wrote in a note to investors.

British activist fund manager Neil Woodford has also remained bullish on a Pfizer/AstraZeneca marriage, saying last month he believes Pfizer will tender a new offer in November, after the United Kingdom Takeover Panel’s “cooling off” period has expired.

Rumors of the merger have sent shares of AstraZeneca up almost 2 percent in trading this week.

Both the group of 66 polled investment analysts questioned by the FT and consensus among the Analyst Ratings Network have advised investor to hold their positions in AstraZeneca for now.