By Dow Jones Business News,
May 08, 2014, 12:01:00 PM EDT
By Hester Plumridge
LONDON--One of AstraZeneca PLC's top 20 shareholders said Thursday that if Pfizer Inc. takes its offer for the U.K.
drug maker hostile, or raises it, there would be "a very good case for engagement."
AstraZeneca's board on Friday rejected a takeover bid of GBP50($84.78) a share from the U.S. giant, valuing
AstraZeneca at more than $106 billion, saying it significantly undervalued the company.
The shareholder potentially open to a hostile or higher bid from Pfizer told The Wall Street Journal he was waiting
to see if another offer from Pfizer emerged.
"We would like to think [members of the AstraZeneca board] were engaging or being prepared to engage with Pfizer,"
said the shareholder, who has been in communication with the company this week.
A spokeswoman for AstraZeneca said Thursday the company was continuing to engage with its investors.
AstraZeneca executives were in Sweden Thursday as part of a week of meetings with the company's top 20
shareholders. Swedish investors are estimated to hold just over 10% of AstraZeneca shares, with U.K. investors holding
around 40% and U.S. investors holding somewhere between a fifth and half of the company.
Two large investors have come out publicly to support AstraZeneca's rejection of Pfizer's advances so far.
Börje Ekholm, chief executive of Investor AB--AstraZeneca's fourth-largest shareholder, with a 4% stake--said
Tuesday he backed AstraZeneca's board in rejecting the bid. Investor AB manages assets on behalf of Sweden's Wallenberg
Martin Gilbert, the chief executive of Aberdeen Asset Management, which holds a 2% stake in AstraZeneca, told the
BBC in a radio interview Tuesday the company had a good chance of staying independent because of the "enormous
credibility" of its management.
Veteran health-care investor Neil Woodford, whose St. James Place U.K. Equity and U.K. High Income funds hold
AstraZeneca stock, said in an interview with the U.K.'sDaily Telegraph newspaper Saturday that he believes AstraZeneca
has a profitable, viable future as an independent company.
In a Friday interview with The Wall Street Journal, AstraZeneca CEO Pascal Soriot said that no shareholders had
asked it to engage when Pfizer made its first offer of GBP46 a share. Mr. Soriot said earlier this week that the
feedback he had received from shareholders so far had been "supportive."
Mr. Soriot on Monday set out ambitious new targets for an independent AstraZeneca, including boosting its sales 75%
by 2023, with roughly a third coming from drugs it is currently developing. On Thursday, the company announced the start
of a late-stage clinical trial for its most important pipeline asset, a cancer drug in the hot new field of
Analysts at Jefferies called the company's new sales targets "overly optimistic." Dan Mahony, a health-care fund
manager at Polar Capital and a small AstraZeneca shareholder, said managers had created some "punchy targets" to live up
to should the company stay independent, adding he thought the stock might fall to GBP40 if Pfizer walked away.
Mr. Mahony said he thought that GBP53 to GBP55 was a "fair price" for the business. AstraZeneca stock was trading
at GBP46.84 Thursday afternoon in London.
Pfizer Chief Executive Ian Read has said the company is reviewing its options and is hoping AstraZeneca will come
back into discussions. Mr. Read has said Pfizer's options could include walking away from a potential deal or even
looking for a different one.
The prospect of a foreign takeover of the U.K.'s second-biggest drug maker--and a shining example of the kind of
high-skilled science and research jobs the U.K. government wants to increase--has stirred up fierce political debate
In an open letter published Thursday in the Daily Telegraph, 30 leading U.K. scientists urged the government to
protect AstraZeneca, which the letter described as "a thriving, profitable company that does not need any input from
Prime Minister David Cameron hasn't ruled out intervening in any deal and has said he wants more--though
unspecified--commitments from Pfizer, which closed a research base and factory in Sandwich, England, in 2011.
AstraZeneca employs around 6,700 people in the U.K.
In tandem with its GBP50 offer Friday, Pfizer said it would keep 20% of a combined company's research-and-
development workforce in the U.K., and establish an "innovation hub" in Cambridge, England. However, the government
would have no means of enforcing the commitments, and Pfizer has only made them for a minimum of five years.
Write to Hester Plumridge at Hester.Plumridge@wsj.com
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