While shares in the Anglo-Swedish pharmaceutical company were not trading on the London stock exchange on Monday because of the Easter holiday, its US shares rose almost 6% on the prospect of what would be the biggest foreign takeover of a British business.
The Sunday Times had reported that Astra had resisted the initial approaches by Pfizer, although Andrew Baum, an analyst at Citi, said: “We anticipate Pfizer to push aggressively ahead with a second approach”. He cited AstraZeneca’s pipeline of cancer drugs and expertise in autoimmune diseases as a reason for its attractiveness to Pfizer, best known for Viagra.
Others were not so convinced. “We see AstraZeneca as a poor fit and an unlikely ultimate target for Pfizer,” said analysts at Jefferies, who calculate that up to 90% of the US company’s cash and short-terminvestments are held overseas.
“Whilst we do not see AstraZeneca as a likely target for Pfizer, its immuno-oncology assets and biologics capability would seem attractive from a 36,000ft perspective. Also there are potentially some tax mitigation strategies that could be deployed on such a deal,” the Jefferies analysts said.
Pfizer’s shares had risen more than 1% to $30.62 by mid-morning trading. AstraZeneca refused to comment on the reports, which raised fears of more job cuts across a pharmaceutical industry still reeling from Pfizer’s decision to shut a development facility at Sandwich in Kent.
AstraZeneca will find it difficult to maintain its silence about a potential deal with Pfizer as it is due to hold is annual general meeting for shareholders on Thursday, where questions are likely to be raised about the reported approach.
Competition authorities might be concerned about any tie-up, according to the Jefferies analysts, who cited the overlap of their cholesterol treatments, Crestor in the case of Astra Zeneca and Lipitor in the case of Pfizer.