Pfizer’s hope for a groundswell of support among AstraZeneca’s shareholders to force takeover negotiations looks unlikely to have an impact, at least before the fast-approaching deadline for an offer.
While some institutional groups such as Axa, Jupiter and Legal & General have publicly expressed their disappointment that AZ’s board was not prepared to engage with Pfizer in talks about the company’s takeover bid, the rumblings hardly amount to a revolt, while other investors such as Threadneedle, Investor AB and Neil Woodford have applauded AZ for its robust response.
A casual calculation of the amount of AZ stock held by the two camps suggests that those who believe AZ was right to stick to a strategy of independence are in the majority, although the situation is very fluid and rumours have emerged that New York-based hedge fund Elliott Management is building a stake in AZ to help put pressure on the company’s board.
On balance though, AZ’s chief executive Pascal Soriot and chairman Leif Johansson seem to have won the investor relations battle – they are big shareholders themselves and could have made a profit on the deal – and their resilience playing the long game strategically seems to have struck the right note.
Meanwhile, the clock is ticking and Pfizer options are very limited before Monday’s deadline for a firm offer under the UK’s takeover rules, while tough talking from both companies suggests it would be hard for a deal to go forward without some loss of face.
Both AZ and Pfizer issued statements this week clarifying the current position legally. Put simply, Pfizer cannot increase its proposed offer of £55 before Monday, although it can tweak the terms for example by raising the cash proportion of the offer (currently at 45 per cent), and must either announce a recommended firm offer or make a statement that it does not intend to make an offer for AZ by 5pm UK time.
Meanwhile, it seems unlikely that investors could convene an extraordinary general meeting (EGM) to force negotiations to take place with just two working days to go.
Pfizer would also be held to its earlier public statement that it will not pursue a hostile takeover, and would not be able to come back with another offer for AZ for six months after the May 26 deadline elapses.
Shares in AZ rose when Pfizer’s interest was confirmed, fell back just as rapidly after AZ rejected the latest £55-per-share offer, and mounted another recovery yesterday as investors voiced their reactions to AZ’s decision.