Pfizer Inc. said Monday that it had abandoned its current attempt to buy AstraZeneca PLC for nearly $118 billion — a deal watched warily by Maryland officials — as a deadline approached without a last-minute change of heart by the British drugmaker.
Pfizer had until 5 p.m. Monday to make a firm offer or walk away, under United Kingdom takeover rules. Its decision to withdraw, at least for now, had been widely expected after AstraZeneca refused its offer of about $92.50 a share.
"Following the AstraZeneca board's rejection of the proposal, Pfizer announces that it does not intend to make an offer for AstraZeneca," Pfizer said in a short news release.
The decision ends a month-long public fight between two of the world's biggest pharmaceutical companies that sparked political concerns on both sides of Atlantic over jobs and corporate tax maneuvers.
Maryland officials have expressed concern that a takeover might lead to job losses. After Pfizer declared its desire to buy AstraZeneca — which employs 3,100 in the state — Gov. Martin O'Malley and six members of Maryland's congressional delegation fired off concerned letters.
Gaithersburg-based MedImmune — a biotech firm AstraZeneca bought in 2007 — is the state's largest life sciences company. Its products include the nasal-spray flu vaccine FluMist.
A merger would have restored Pfizer as the world's largest drugmaker by sales, a position it relinquished to Swiss-based Novartis when billions of dollars in annual revenue evaporated after its top-selling cholesterol fighter Lipitor began facing generic competition in 2011.
"We continue to believe that our final proposal was compelling and represented full value for AstraZeneca based on the information that was available to us," said Ian Read, Pfizer's chairman and chief executive.
British rules now require an enforced cooling-off period. AstraZeneca could reach out to Pfizer after three months and Pfizer could take another run at its smaller British rival in six months time, whether it is invited back or not.
Pfizer had urged AstraZeneca shareholders to agitate for engagement and several expressed disappointment at its intransigence, although others — encouraged by AstraZeneca's promising drug pipeline — backed the firm's standalone strategy.
What happens next will depend upon whether AstraZeneca's share price deteriorates in the coming weeks and how hard its shareholders push for it to revisit a deal with Pfizer.
BlackRock, AstraZeneca's biggest shareholder, backed the board's rejection of Pfizer's offer, but urged it to talk again in the future.
The proposed transaction ran into fierce opposition from politicians in Britain, Sweden — where AstraZeneca has half its roots — and the United States over the likelihood that the marriage would lead to thousands of job cuts.
Ultimately, it was price, and the lack of room for eleventh-hour maneuvering by Pfizer, that killed the deal.
Pfizer had several reasons for taking aim at AstraZeneca for what would have been its fourth mega-merger in 14 years.
Highest on the list appeared to be Pfizer's desire to take part in a recent trend of so-called tax inversions, under which it could reincorporate in Britain and pay significantly lower corporate tax. Pfizer would also be able to use tens of billions of dollars it has parked overseas, avoiding high U.S. taxes for repatriating the huge cash pile.
Pfizer also had its eye on a promising portfolio of drugs in AstraZeneca's developmental pipeline, especially several potentially lucrative cancer medicines.
It was this pipeline that AstraZeneca management used to make its case for Pfizer significantly undervaluing the company. Chief Executive Pascal Soriot went as far as making a 10-year forecast for a 75 percent rise in sales by 2023.
"As we said from the start, the pursuit of this transaction was a potential enhancement to our existing strategy," Pfizer's Read said. "We will continue our focus on the execution of our plans, bringing forth new treatments to meet patients' needs and remaining responsible stewards of our shareholders' capital."Copyright © 2014, The Baltimore Sun