Discuss the pfizer’s bid about pfizers unsuccessful takeover of astrazeneca

Rationale for Pfizer bid to Takeover AstraZeneca By definition acquisition premium is the difference between the company’s estimated real value and the actual value which is to be paid to obtain it (Blumberg et al., 6) It represents the increased cost of buying a given company during acquisition and merger (Hirschey and Norfsinger 23). After the failed attempt by the pFizer company to make a deal with AstraZeneca, the company sees that it’s against the odds to have a repeat of the bid for AstraZeneca. Neil Woodford who is the fund manager sees that there is a probability of 50/50 for Pfizer to make another bid once the six month hands off period expires in a few days from now. The ratio is felt to be too high. First of all, the reason why the bid never went through is because, AstraZeneca pharmaceutical group offered 55pounds per share but it could have been depending on its tax inversion plans in order for its numbers to stack up. Unfortunately, such tax flips are not outlawed by the state (it was made harder) but in case of any new offer it may need to structure to a more like a merger instead of a takeover to attain the revised rules.
The investors of AstraZeneca were offered an all share deal of 40% ownership for this new company . But it is seen that it may value the UK Company 60 pound-ish. The tricky part here is that Pfizer would find it challenging to explain to its shareholder why they should suddenly pay so much like that. Despite this, it might be a good opportunity for the two companies to make a deal that will benefit both of them such as synergy effect and this could be considered after taking into account the tax related issues.
Another reason for un-successive bid for AstraZeneca is that the Pfizer boss Ian Reads fears his credibility being shattered in case he failed twice to make another huge deal with this UK Company. Also the current political temperature in UK may act against him.
Another reason for un-successive bid might be related to acquisition premium. For instance, currently the rising stock market as well as the share price of banks has fallen this week from 958p to 924 p and it can be noted that this is a fresh 5 year low. This could probably affect the premium acquisition whereby the company value will go down hence forcing the US Company to make fresh bid or withdraw the bid completely
As mentioned before, tax flips are not outlawed by the state and these conditions makes it hard for AstraZeneca Company to be in a deal with pfizer. In this case, it would be easy for the companies to merge . Mergers and acquisitions are made with the objective of improving the financial performance of the company as well as for the shareholders, hence creating a synergy effect. In this case, the two companies could merge to form one company which has the capacity of generating more revenue than either could have been able to independently. But in case of any new offer by the UK Company, AstraZeneca may need to re-plan to a more like a merger instead of a takeover.
Works Cited
Hirschey , M., Norfsinger, J. Investments: Analysis and Behaviour. New York: McGraw Hill. 2010. Print
Blumberg, B., Cooper, D. R. & Shindler, P. S. Business Research Methods. London: Mcgraw Hill. (2008). Print