Martyn Postle on the Pfizer Bid

astrazeneca09:23 Monday 19th May 2014
BBC Radio Cambridgeshire

[A]NDIE HARPER: This morning Astrazeneca has rejected the fourth and final takeover bid from its American rival Pfizer. The new bid valued the company at £69 billion, but the Chairman of the British pharmaceutical company said it undervalued the firm. However since they turned their offer down, the share value has now plunged by 14%, driving its market value down (to) £52.1 billion. That’s in a very short time indeed. So, is that the end of the battle of the drug companies? Martyn Postle is a director of Cambridge Healthcare and Biotech. Martin, good morning to you.
MARTYN POSTLE: Good morning Andie.
ANDIE HARPER: So, markets react so quickly, don’t they? Most people think people standing on the outside would have been quite pleased to hear them say that they’ve rejected the final offer by Pfizer, but now what happens?

MARTYN POSTLE: Well as you say the shares plummeted, as you’d expect, when the market opened this morning. They’re actually recovering slightly. They’re off about 12% at the moment, and I’m just looking at the graph, they’re going up again. Well after now what happens? I think there’s probably a bit of soul searching by the investors, and I think the Astrazeneca board are going to have some interesting conversations with their major investors. But they probably already told them, as part of the process of the last couple of weeks. I’m delighted they’ve rejected the bid, but frankly I’m very surprised.
ANDIE HARPER: Now I did wonder how quickly they could come out and say no, having not consulted their shareholders, because we only heard first thing this morning this was the final offer, and then pretty much soon afterwards it was rejected. So as you say, this would have been discussed with shareholders over the last couple of weeks. And would they have had a figure where the shareholders would have said yes please?
MARTYN POSTLE: Well in fact the board of AstraZeneca and Pfizer had a conference call yesterday afternoon where the Chairman of Astra said to Ian Read of Pfizer look, if you’re going to make us an offer it’s got to be at least £58.85 for us to recommend it to our shareholders. And then more or less after they hung up, Pfizer came out with their final offer of £55, saying it was their final offer, and saying that they weren’t going to go hostile. And that really surprised me.
ANDIE HARPER: Why would they say £58 to Pfizer, and Pfizer only valued £55? Are they playing games, or did they simply not think they were worth £58?
MARTYN POSTLE: Well I hope that they simply didn’t think they were worth it, and they weren’t just playing used car dealer, you bid this and I’ll bid that, which is why I’m surprised they said right, this is our final offer and we’re not going to go hostile. because if Astrazeneca shareholders had a figure in mind, then it would have been possible for Pfizer to go direct to the shareholders.
ANDIE HARPER: Now as you say, shares dropped, but they’ve already started to recover a little bit. This won’t give Astrazeneca shareholders the jitters, will it, and they say come on, let’s have a second thought about this?
MARTYN POSTLE: No, because the reason Astrazeneca shares are where they were on Friday, was because of the Pfizer bid. There was a natural level for the Astrazeneca shares. If somebody bids more then it’s quite natural for the share price to come up. I’m actually slightly surprised that the Astrazeneca shares haven’t fallen more today than they already have.
ANDIE HARPER: Given what you know about the way these companies behave, these big companies behave, do we really think this is it? Because it has been a saga. It’s been a saga for so many people who perhaps aren’t that interested, but they can’t help getting dragged in to it because that’s all they hear about. Is this it?
MARTYN POSTLE: Well I think this is it this time round. Whether Pfizer go away, maybe come back again in a few months time having done a bit more research, and perhaps with a different strategy, remains to be seen. But I think Pfizer were probably surprised by the amount of negative press and the amount of political pressure that was put on them here, in Sweden, and especially in the US. If they’d gone ahead with this, particularly if they’d gone ahead with this as a hostile takeover, then they’d have politicians in the three countries looking at Pfizer as really not a very good corporate citizen.
ANDIE HARPER: So for the moment the story ends here.
MARTYN POSTLE: Yes. I think everybody in Cambridge breathes a sigh of relief.
ANDIE HARPER: Martin, it’s been really good to talk to you. Thanks for talking to us. this morning.

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