Advanced Corporate Finance

Pfizer’s unsuccessful takeover of AstraZeneca

For an overview of the case please read the timeline available at

http://www.theguardian.com/business/2014/may/14/pfizer-takeover-approach-astrazeneca-timeline

This case illustrates how a takeover unfolds when the target’s management are not in favour of the takeover.  Pfizer keep raising their offer price whilst AstraZeneca

provide a defence by publishing a strategy document.
Following the Kraft-Cadbury case and, in particular, the loss of jobs which had been promised as secure, the UK government intervenes and the takeover becomes a

potential vote issue.
One main motive for Pfizer’s bid appears to be a desire to move to the UK to lower its tax bill.
The takeover is unsuccessful but the media suggests that when the regulatory deadline (late November) passes Pfizer will launch another bid for AstraZeneca.

Required (all parts carry equal marks)
a.    Using the timeline cited above discuss the history of the case identifying dates when investors are likely to become aware of new information.
b.    Discuss the rationale for Pfizer’s bid.
c.    Examine the stock returns for both Pfizer and AstraZeneca during the bid process and provide possible reasons for changes in price on key dates.
d.    Briefly discuss the arrangements which would enable Pfizer to lower its tax bill.
You might find the following website useful (although it relates to Burger King and there are plenty of news releases relating to Pfizer’s potential tax inversion)

http://www.ft.com/cms/s/0/4ccb9560-3cfc-11e4-871d-00144feabdc0.html?siteedition=uk#axzz3DgGekUYI

e.    Discuss the reasons for the UK intervening in the bid process and explain why Kraft-Cadbury has influenced the government’s stance on mergers and acquisitions.

The following may be of help but do search for more.

http://www.bbc.co.uk/news/business-27187215

http://www.bbc.co.uk/news/business-27258143

http://www.bbc.co.uk/news/business-27185027

http://www.bbc.co.uk/news/business-27274954

http://www.publications.parliament.uk/pa/cm200910/cmselect/cmbis/234/234.pdf

http://www.ft.com/cms/s/0/f7f00654-39ca-11e4-83c4-00144feabdc0.html#axzz3DYItqmrh

http://www.bbc.co.uk/news/business-27466278