AZ rejects upped Pfizer bid

AstraZeneca plc (LSE:AZN; NYSE:AZN) rejected an increased bid from Pfizer Inc. (NYSE:PFE) to acquire AZ for about L62.9 billion ($105.9 billion) in cash and stock. The offer was about a 7% increase to the L58.6 billion ($96.2 billion) Pfizer bid that AstraZeneca rejected in January. AstraZeneca said the terms of the new offer still "substantially undervalue" the pharma and noted that Pfizer stock still comprises a "large proportion" of the offer. Based on Pfizer's close of $31.35 on Thursday, about 68% of the new offer would have been in stock. About 70% of Pfizer's January offer was in stock. The companies disclosed the January bid on Monday (see BioCentury Extra, April 28).

Pfizer plans to incorporate the combined company in the U.K., with headquarters in New York. On a conference call on Monday, Pfizer declined to give a specific estimate of the combined company's tax rate but said it would be lower than Pfizer's tax rate as a single company. Pfizer's 2013 effective tax rate was 27.4%. The U.K. has a corporate tax rate of 21% that is dropping to 20% in April 2015; the U.S. corporate tax rate is 35%. In a letter to U.K. Prime Minister David Cameron, Pfizer said it would base the combined company's European headquarters in the U.K. and employ at least 20% of its R&D workforce there. ...