HOWEVER, it now all turns on how big a bite this takes from Pfizer stock tomorrow on the NYSE, at open. It is my experience that this sort of a "paying up" move, will drop the per share NYSE quoted price of Pfizer, tomorrow. How much is the key question. I was suggesting above $120 billion, to account for that drop, on the NYSE. I could get surprised, and Pfizer could rise in the morning, to make the offer around $120 billion -- but I'd not bet on it. Note that each dollar of decrease in Pfizer's NYSE quoted price will drop the final offer price by 55 cents. It is just simple math now. Should be a crazy open, in Pfizer stock tomorrow. [Was this all an Ian C. Read ruse -- to force a public debate on corporate tax rates in the US? Perhaps, just as I have repeatedly guessed.]
From Reuters just now, then:
. . . .55 Pounds; 45 per cent in cash, 55 per cent in Pfizer stock. . . The U.S. group said its new offer was final and could not be increased. It said it would not make a hostile offer directly to AstraZeneca shareholders and would only proceed with an offer with the recommendation of the AstraZeneca board.
Pfizer also increased the cash element in its offer to 45 percent, with AstraZeneca shareholders set to receive 1.747 shares in the enlarged company for each of their AstraZeneca shares and 2,476 pence in cash. . . .
For its part -- just as I said -- Pfizer now admits it cannot go hostile. The deal cannot be done as a hostile. Q.E.D.
So this is Ian C. Read's "final" offer. It is my guess that the AZ board will consider it -- but without a majority of the consideration being flipped to cash, and/or without the price of Pfizer's stock rising say 5 to 10 per cent on the NYSE tomorrow (i.e., ain't gonna happen!). . . I'd bet the deal doesn't get done in 2014. Or at all. Bold guess -- but the AZ team will negotiate in good faith for a bit, seeking a fairer share in cash rather than stock, for the AZ shareholders -- then, when Ian C. Read won't oblige -- AZ will politely push away. As they ought to, as fiduciaries.
That's my gut. [And, oddly enough, this is my 3,000th post. Hmmm. Hawks won Game One against the Kings, as well. Nice!]
3 comments:
And Ian Read's later statement confirms that AZ has pretty much already said no...
London's Financial Times is reporting that AZ will formally reject the offer by mid morning Monday NYC time -- end of day Monday, in London.
So likely ends Ian's cameo as a would be Wesley Snipes...
Namaste
In its formal rejection, AZ has indicated that a minimum fair bid (if mostly Pfizer stock) would be 55.85 Pounds Sterling, or about $126.8 billion USD.
I guessed $128 billion, because if accepted, the Pfizer stock portion would almost certainly decline in value on the NYSE, due to dilution, and deal uncertainty.
As it is, both firms' shares will very likely now decline at NYSE open, in my estimation.
Namaste
PS: I suppose if the market believes Mr. Read really is walking away, Pfizer might recover -- over the next few sessions -- at least a part of the 14 per cent decline in its stock -- since deal announcement.
What a mess Mr. read made of all of this. Gracious!
Typo alert: 55.85 Pounds ought to read 58.85 Pounds -- that's what the spot rate $126.8 billion USD works out to be...
Apologies!
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