AstraZeneca rejects sweetened Pfizer takeover bid

LONDON - Pharmaceutical company AstraZeneca flatly rejected drugmaker Pfizer's sweetened takeover bid - worth $106 billion - just hours after it was leveled Friday, describing it as inadequate.

After being rebuffed twice, Pfizer, the maker of Viagra, made a third attempt Friday for the London rival, offering 50 pounds ($84) a share in cash and stock, a 7.3 percent increase on its last bid. The deal would be the biggest-ever foreign takeover of a British business.

But AstraZeneca's board said that the terms were not right and that the price substantially undervalued the company. The Anglo-Swedish firm said the potentially lucrative "pipeline" of new drugs it has been developing would be disrupted by a takeover and its possible consequences.

Both companies have operations in the Philadelphia region.

"Pfizer's proposal would dramatically dilute AstraZeneca shareholders' exposure to our unique pipeline and would create risks around its delivery," said Leif Johansson, the chairman of AstraZeneca. "As such, the board has no hesitation in rejecting the proposal."

Pfizer's bid comes amid a spate of mergers and acquisitions in the pharmaceutical industry, which is moving to consolidate gains as the patents on some top earners expire. Besides giving Pfizer access to a pipeline with promising assets, particularly in immuno-oncology, analysts suggest, the deal gives the company tax advantages.

"There is a highly compelling strategic, business, and financial rationale for combining our businesses," Pfizer CEO Ian Read said in a statement announcing the offer, "with significant benefits for shareholders and stakeholders of both companies."

But the move quickly became political in Britain. Critics fear that the takeover could mean big job cuts, and the potential loss of stature in the country's science sector.

Cognizant of the concerns, Pfizer sent a letter to Prime Minister David Cameron, promising to keep the company's corporate and tax residence in England. It said the "golden triangle of Oxford, Cambridge, and London" - where a significant portion of British scientific research is based - would represent a vital component of the deal.

Cameron responded within a few hours, declaring that, while the government regarded the potential takeover bid as a matter for the respective boards, the government was "determined to secure great British science, research, and manufacturing jobs in the life-sciences sector."

"The government will consider these proposals carefully as to whether they offer sufficient protection of our priorities," Cameron said.

Britain is investing millions of pounds into boosting science in the so-called Golden Triangle in the country's southeast. Only last month, London Mayor Boris Johnson announced a new investment organization meant to attract life-sciences corporations and to facilitate collaboration between companies and researchers.