By Hester Plumridge
LONDON--Three days after AstraZeneca PLC slammed the door on
Pfizer Inc.'s latest $120 billion takeover offer, some big
investors in the British drugs giant are refusing to give up.
AstraZeneca's sixth-largest investor, Legal & General Group
PLC, is urging the company's board to reverse its rejection of the
deal, two people familiar with the situation said. The move is the
most recent by a still-small number of investors--holding 8.4% of
the company's shares--whose opposition to the deal has become
public. Underscoring the investor divide over AstraZeneca's
decision, a handful of investors, representing 9.6% of shares
outstanding, have backed the board publicly.
The investment arm of the U.K. insurer holds a 3.5% stake in
AstraZeneca. It wrote to the company's board asking it to engage in
talks with Pfizer, one of these people said. Legal & General
declined to comment. AstraZeneca declined to comment on individual
shareholder interactions, but said it is continuing to engage in
general with its investors.
AstraZeneca on Monday rejected a "final" takeover offer from
Pfizer worth GBP55 ($92.89) a share. Under U.K. takeover rules, the
companies have until Monday to enter talks, or the offer will
expire. The quick rejection dramatically dimmed hopes of a deal,
though an investor uprising could force the company's hand and
convince it to re-engage in talks.
After falling sharply Monday after the rejection, AstraZeneca
shares closed 2.59% higher Wednesday in London trading, after
rising close to 4% at one point, after The Wall Street Journal
reported Legal & General's opposition. Still, at GBP44.20 late
Wednesday, shares are still trading far below Pfizer's offer price,
suggesting most investors still don't believe a deal can be
done.
Legal & General joins AXA SA, Schroders PLC and Jupiter Fund
Management PLC as large AstraZeneca investors that have expressed
disappointment at its rejection of the offer. Schafer Cullen
Capital Management Inc., a New York investment firm that says it
controls around 1.5% of AstraZeneca stock in accounts and funds
managed on behalf of its clients, told AstraZeneca Chairman Leif
Johansson on a half-hour telephone call Wednesday that it was
"unhappy," and that AstraZeneca should sit down with Pfizer,
according to Jennifer Chang, a Schafer Cullen portfolio manager.
Combined the five investors hold about 8.4% of AstraZeneca
stock.
"Many shareholders--but not necessarily all--will find this an
attractive offer," said Jim Stride, head of U.K. equities at AXA
Investment Managers U.K., in a statement issued Wednesday.
"Accordingly we believe that the board...was arguably wrong and
acted too hastily to dismiss the latest proposal from Pfizer."
Still, odds that enough shareholders will challenge the board's
decision are steep. Other big, influential investors--including
Investor AB, Aberdeen Asset Management PLC, Fidelity Investments
Inc., St. James Place PLC, M&G Investments and Threadneedle
Asset Management Ltd.--have publicly backed the board. Together
these six investors hold about 9.6% of AstraZeneca.
A spokeswoman for Threadneedle said Wednesday the company
continued to support the board's stance. "We feel the full
implications of the proposed acquisition haven't been sufficiently
understood and addressed by Pfizer," she said.
Many other investors, including top-five shareholders BlackRock
Inc. and Wellington Capital Management Inc., have declined to
comment on their views of the board's actions. Because of U.K.
takeover rules, Pfizer's offer will expire by 5 p.m. BST Monday--a
holiday in Britain and the U.S. That gives opponents of the board's
decision just two more working days to make their case to the
board.
If the companies don't enter talks by Monday, Pfizer must wait
between three and six months if it wants to return with another
bid. Under U.K. takeover rules, Pfizer is permitted in only limited
circumstance to change the terms of its offer before Monday.
It can increase the cash component, boosting it from the current
45% cash mix, or add a contingent-value right--a structure in which
AstraZeneca could get additional shares or cash in the event of an
experimental drug being approved. However, it isn't allowed to
increase the value of its total offer above GBP55.
Although it is possible that shareholders might pressure the
AstraZeneca board into engaging with Pfizer, or that Pfizer might
fiddle with components of its offer, "it seems increasingly likely
that there will be no further developments for 3-6 months beyond
the 26 May," analysts at Barclays wrote in a note to clients
Wednesday.
-Jonathan D. Rockoff contributed to this article.
Write to Hester Plumridge at Hester.Plumridge@wsj.com
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