Pfizer Eyes Possible Actavis Bid Whilst Weighing Next Steps Over AstraZeneca PLC

Published: Aug 22, 2014

Pfizer Eyes Possible Actavis Bid Whilst Weighing Next Steps Over AstraZeneca PLC Pfizer Eyes Possible Actavis Bid Whilst Weighing Next Steps Over AstraZeneca PLC

August 21, 2014

By Mark Terry, Breaking News Staff

Analysts and unnamed sources continue to speculate on potential targets for U.S. pharmaceutical company Pfizer Inc. to acquire. As reported in early August, Berenberg Bank speculated that Pfizer might bid on UK-based GlaxoSmithKline . This was in response to a failed Pfizer bid to purchase AstraZeneca PLC for £70 billion.

Now, analysts are speculating on whether Pfizer may consider a bid for Actavis . According to unnamed sources, Pfizer executives prefer to stay focused on AstraZeneca, but the rumors are definitely flying that the company may look elsewhere.

UK regulations require potential buyers who abandon a bid to wait six months before trying again. The cooling-off period for Pfizer and AstraZeneca will end on November 26. However, within three months, AstraZeneca can re-enter talks with the bidder, which will come up on August 26th. Given that AstraZeneca turned down Pfizer’s initial bid as being too low, this seems unlikely. Pfizer’s final proposal was 55 pounds per share and AstraZeneca indicated they would need at least 58.85 pounds per share to consider the proposal.

At least one analyst, Odile Rundquist of Helvea SA in Geneva, has suggested that AstraZeneca may be confident in its pipeline of experimental drugs to request an even higher asking price.

AstraZeneca hasn’t been lying idle waiting for a company to swoop in and buy them. Today they announced a partnership with Illumina Inc. to develop a next generation sequencing platform for companion diagnostic tests that can be used across AstraZeneca’s oncology portfolio. They also recently announced positive top-line results from Phase III studies for a potential new antibiotic, ceftazidime-avibactam (CAZ-AVI) in addition to the end of a Department of Justice investigation into the drug Brilinta®.

Actavis Plc, headquartered in Dublin, Ireland, has been the most recent focus of speculation concerning a Pfizer acquisition. Like AstraZeneca, Actavis is involved in the CAZ-AVI clinical trials. And because it is domiciled in Ireland, has a significantly lower tax structure than the U.S.

Pfizer CEO Ian Read has indicated that one reason the company is looking at acquisitions is to lower Pfizer’s tax rate and gain access to overseas cash. Pfizer has approximately $48.8 billion in cash, equivalents and short and long-term investments, about 70% located overseas. On July 1, Actavis closed a $28 billion takeover of Forest Laboratories Inc., which gave the merged company a $59 billion market value, large enough for Pfizer to change its tax headquarters to Dublin. Analysts remain convinced that Pfizer’s top priority is a tax inversion, in which the company acquires a company in a foreign country with a lower tax rate, allowing their headquarters to move to that country while keeping operations and infrastructure in the U.S.

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