AstraZeneca’s (LSE: AZN) (NYSE: AZN.US) decision to turn down Pfizer’s £55 per share takeover offer split opinions. Some investors praised the company and its management for taking a hard line, while others expressed concern at management’s disregard for shareholders.
However, while the Pfizer deal is off the table for now, another predator could be eying up Astra.
Attractive qualities
Pfizer was originally attracted to Astra due to the company’s impressive oncology portfolio, or portfolio of cancer treatments under development. Pfizer was also attracted by the UK’s low corporate tax rate, although the oncology treatments were undoubtedly the bigger prize.
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Pfizer’s oncology portfolio is surprisingly small, considering the fact that the company is the world’s largest biotechnology player.
Nevertheless, Pfizer’s smaller peer Roche (NASDAQOTH: RHHBY.US) has one of the largest oncology portfolios in the business. Indeed, Roche reported oncology sales of $25bn during 2013, more than double the sales of its closest competitor, Amgen, which reported oncology sales of $12bn during the period.
For this reason, to boost its presence within the oncology market, Roche could be eying up Astra.
Working together
Roche and Astra would make a perfect fit. Indeed, the two companies are already working together on a number of initiatives and collaborations.
As Astra has developed its oncology portfolio, Roche has become a sort of role model for the smaller company. This could be something to do with the fact that Astra’s CEO, Pascal Soriot worked at Roche before coming to Astra.
These two industry giants are now working together on several projects, including Astra’s MEDI4736 anti-PD-L1 therapy for non-small cell lung carcinoma, which both companies are jointly developing. Roche has also signed an agreement to help Astra design a number other of early-stage treatments.
And these agreements could lead to further collaborations between the two parties. A buyout however, would ensure that Roche corners the oncology market, without divulging secrets to Pfizer.
The return of Pfizer
Still, there is a chance that Pfizer could make another attempt to acquire Astra. Under UK takeover rules Pfizer has to take a six month cooling-off period after issuing a bid offer marked ‘final’. However, the company can make another bid with three months, if Astra’s management invites Pfizer back to the negotiation table.
What’s more, Pfizer gained the support of many shareholders during its last takeover attempt. So, there is nothing to stop the company initiating a hostile takeover when it comes back for a second attempt — a hostile takeover bypasses management and goes straight to shareholders.
Further, shareholders have been piling pressure on Astra’s management recently, asking them to reinstate negotiations with Pfizer.
All in all, Astra is an attractive prize and while Pfizer cannot make another bid just yet, Roche could be eying up the company.
