Fast forward 30 years -- and it is likely that Merck will ultimately call the FTC/DoJ, and the European Competition Commission to express just how Ian's likely hostile takeover will affect the markets here and there. S-w-e-e-e-e-e-e-t. From AstraZeneca's Form 6-K and SEC Rule 425 prospectus, as filed an hour or so ago, then:
. . . . At this [January 4, 2014] meeting, Pfizer made a preliminary and conditional proposal regarding a possible offer for AstraZeneca (the "Proposal"). The Proposal comprised £13.98 in cash (30%) and 1.758 Pfizer shares (70%) per AstraZeneca share, representing a value of £46.61 per AstraZeneca share, based on the closing price of Pfizer shares of $30.52 on 3 January 2014. The Proposal also involved a new US listed and headquartered holding company. . . .
The Board of AstraZeneca concluded that the Proposal very significantly undervalued AstraZeneca and its prospects. The Board highlighted its concerns regarding the proposed transaction structure, which contained a large proportion of the consideration in Pfizer shares. The Board of AstraZeneca also raised certain concerns regarding the execution risks associated with the proposed inversion structure, as Pfizer would redomicile to the UK for tax purposes. As a result, AstraZeneca wrote to Pfizer on 12 January 2014 rejecting the proposal and did not engage further with Pfizer. AstraZeneca was subsequently notified by Pfizer on 15 January 2014 that it was no longer actively considering making an offer for AstraZeneca. . . .
AstraZeneca's share price has performed strongly and consistently since late last year as AstraZeneca has continued to deliver on its clearly stated strategy, in particular the strengthening of its diabetes franchise and the progression of its oncology pipeline.
Goldman Sachs International, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting exclusively for AstraZeneca and no one else in connection with the matters referred to in this announcement and will not be responsible to anyone other than AstraZeneca for providing the protections afforded to clients of Goldman Sachs International, or for providing advice in connection with the matters referred to in this announcement.
Morgan Stanley & Co. International plc, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting as financial adviser to AstraZeneca, and no one else in connection with the matters referred to in this announcement. In connection with such matters, Morgan Stanley & Co. International plc, its affiliates and its and their respective directors, officers, employees and agents will not regard any other person as their client, nor will they be responsible to any other person other than AstraZeneca for providing the protections afforded to their clients or for providing advice in connection with the contents of this announcement or any other matter referred to herein. . . .
Note these four things, just quickly -- (1) the original offer was not a cash offer -- it was primarily a Pfizer stock offer. That's not attractive in a hostile setting. In fact, having done it in that way, Ian Read has bolstered the AZ board's "exercise of fiduciary duty" (just saying "no") defense -- in refusing his demonstrably inadequate offer. When the deal goes fully hostile, PFE's NYSE price may be likely to tumble, reducing the overall deal value to AZ shareholders [Ian may be out of his depth, here]; (2) it is perfectly appropriate for the AZ board to just say no, until Pfizer makes a firm, all cash, $100 billion plus offer -- with either secured financing, or highly confident letters from reputable banks; (3) Merck and Lilly and Glaxo (among others) are all likely to complain to the antitrust authorities (delaying everything -- at a minimum); and (4) Goldman is repping AZ. 'Nuff said. This is going to be one great and entertaining train-wreck. Um. . . say Bye-bye, Ian. Bye bye.
4 comments:
Hmm.. I am sure the mkt is anticipating the bid to go fully hostile already and yet PFE shares have moved up by a dollar today. If memory serves, Goldman Sachs was also Warner Lambert's banker during that takeover....though arguably it was a different company then. Still this could be a train wreck for sure but far from a done deal.
Agreed -- but by train wreck I actually mean it will undo Mr. Read.
He will be unmasked. If he needs 20 percent of PFE shares to be issued to AZ holders (into the inversion) for the deal to qualify for a redomicile in the UK (lowering PFE's effective tax rate), then the deal is likely DOA.
The AZ board can just say no. And Read may be shown the exit, by his board -- for making such a mess of things.
One other way this gets done is that PFE splits into three pieces essentially concurrent with an all cash AZ takeover -- and as I predicted, Read ends up as a net seller, not a net buyer!
Namaste! Do stop back!
Latest grist for the mill is Merck and others (allegedly BMS) will stay out of the antitrust fray to protect their own brewing deals. Hard to believe with Ken's comments about innovation vs consolidation but, as with all things, time shall tell.
I wanted to belatedly offer a counter-point to the usual wisdom that people stay out of one anothers' antitrust spats.
In general, on all mid-size to smaller deals -- that is certainly how competitors usually treat one another. Hands off -- lest you come bite me, next time I'm on the tenderhooks at the FTC/DoJ or ECC.
However, at least in prior eras -- when a truly chart topping hostile deal gets rolling -- involving the no. 1 in the market. . . .
Most CEOs down the line find a subtle way to express their quite valid concerns about such intensely concentrated markets.
I think this will be one of those times. Add to that that most CEOs find Mr. Read a rather unfriendly, pugnacious sort. . . and he doesn't do much to charm people, either.
I think some big CEOs will send some lobbyists/law-firms on very hush hush meeting missions. . . in the UK and over here.
The upshot will be a very exacting review -- should this ever become a friendly -- or voted in proxy battled -- deal.
Just my $0.02 -- your mileage may well vary. In fact, it likely already does.
Namaste, and do stop back!
At this size
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