AstraZeneca CEO Soriot Says Pfizer Buyout ‘Not Inevitable’

May 14, 2014 12:44 pm ET

(Updates with Soriot comments starting in seventh paragraph.)

May 14 (Bloomberg) -- AstraZeneca Plc Chief Executive Officer Pascal Soriot said a sale of the U.K. drugmaker to Pfizer Inc. is “not inevitable” and repeated that the current offer significantly undervalues the company.

AstraZeneca would also need assurances about the future of the new company, including its strategy and its tax status, before agreeing to negotiate a deal, Soriot said today in a telephone interview. Pfizer plans to sweeten the offer of 60.4 billion pounds ($101 billion) that AstraZeneca rejected, people with knowledge of the matter said.

“The price is really far from what we think the value of the company is,” Soriot said. “It’s a package of things to discuss, but it really starts with the price and it has to be at the right level.”

Soriot’s comments signal that the London-based drugmaker is in no hurry to be bought and may increase speculation that New York-based Pfizer will need to take its offer directly to AstraZeneca shareholders. Pfizer wants to begin talks with AstraZeneca to get “a better understanding of its business and its prospects” before proposing a higher price, the U.S. drugmaker said yesterday.

“Constructive engagement may lead to a transaction that AstraZeneca can recommend,” Pfizer said yesterday in a statement. “Pfizer will continue to be disciplined on price.”

Possible Cuts

Pfizer’s proposed takeover is facing skepticism from U.K. lawmakers concerned by possible job cuts and the company’s unwillingness to commit to preserving AstraZeneca’s workforce. Pfizer CEO Ian Read and Soriot both appeared before parliamentary committees yesterday and today to answer questions about consequences of the acquisition.

A takeover could distract AstraZeneca from advancing its pipeline of experimental drugs, and even more so were Pfizer to launch a hostile bid, Soriot said.

“The risks are exacerbated in a hostile situation,” he said in the interview. “ Any merger of this magnitude is disruptive and that’s why we would want to discuss strategy, the operating model and how we would go about merging these companies, if we ever get to this.”

Pfizer would try to protect AstraZeneca’s most valuable products in a takeover and wouldn’t jeopardize the pipeline, Read said to the Science and Technology committee today.

“There’s no truth that products of a critical nature would be delayed getting to patients,” Read said. “If anything, we would accelerate those products.”

Lower Offer

Pfizer contacted AstraZeneca last year to discuss a purchase, and Chairman Leif Johansson and Soriot flew to New York to meet with Pfizer, which made the initial bid of about 46.61 pounds a share, Soriot said.

The subsequent cash-and-stock offer initially valued the company at about 50 pounds a share and now has a value of 47.83 pounds a share. AstraZeneca rose 0.3 percent to 46.54 pounds at 3:39 p.m. in London.

“The offer today is 48 pounds,” Soriot said. “The offer is hardly different from the January price, but in the meantime, our pipeline has progressed quite a lot. I don’t see why we would accept today what we didn’t think was the right price in January.”

None of AstraZeneca’s shareholders have pressed him to accept the current offer, said Soriot, who also sits on the company’s board of directors.

“Of course, shareholders will tell us, but they don’t even need to tell us, that if the appropriate offer was made, we should consider the offer,” he said. “But we know this and we certainly agree.”