Pfizer Inc. made an official statement, revealing that it increased its offer for the second-largest drug manufacturer in the U.K. – AstraZeneca Plc to about 63.1 billion pounds (106.5 billion dollars) in an attempt to lure the latter with the idea of negotiations.
Pfizer Inc. said in its statement, which was cited by Bloomberg: “Pfizer hopes that the increased proposal will provide the basis for AstraZeneca to engage with Pfizer and enter into discussions relating to a possible combination of the two companies.”
Pfizer’s new bid estimates AstraZeneca at 50 pounds a share, compared to the previous offer of 46.61 pounds per share which was rejected by AstraZeneca with the explanation that such a bid “significantly undervalued” the company.
AstraZeneca was approached for the first time by Pfizer in November 2013, and their representatives had a meeting in New York in January 2014. Pfizer then offered a cash-and-stock deal that consisted of 30% cash and 70% Pfizer stock.
On Monday, Pfizer revealed that it is interested in the acquisition of AstraZeneca in an attempt to form the largest pharmaceutical entity in the world after an eventual merger. If the two companies reach an agreement, this would not only be the biggest deal in more than a decade, but will also provide Pfizer with a lower tax rate and a number of several cancer, diabetes and heart disease drugs that are being tested, helping it create a larger portfolio compared to its rivals.
An eventual merger is also considered beneficial to both counterparts, because the companies would be able to reduce the losses of billions of dollars in sales. In addition, Pfizer will be provided with the opportunity to consolidate its three divisions.
Pfizer Inc. said in its statement that the new terms of the offer to the stockholders include receiving 15.98 pounds per share in cash and 1.845 shares apiece of the entity formed after the merger.
Pfizer Inc. lost 0.42% to close at 31.15 dollars per share yesterday in New York, marking a one-year change of +7.79%. The drug maker is valued at $198.74 billion. According to CNN Money, the 18 analysts offering 12-month price forecasts for Pfizer Inc. have a median target of $34.50, with a high estimate of $41.00 and a low estimate of $29.00. The median estimate represents a +10.75% increase from the last price of $31.15.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
