Advanced Corporate Finance Assignment - Essay Example

Advance Corporate Finance Introduction The whole interest begun on the 25th of November, when Ian Read, who is the Chief of Pfizer approached AstraZenecas chairman, Leif Johansson to request them to discuss about a merger between the two companies. All agreed, and the meeting was scheduled for early the following year, 2014. The two sides of leadership then met on 5th January, 2014, in New York, for what was termed as ‘high level talks. The first proposal by Pfizer hit £58bn or £4661 per share, a price that was declined by AstraZeneca.

On 26th April, 2014, Read requests to meet Johansson to initiate fresh talks. Johansson declines to any more talks on a merger. Two days later, Pfizer decides to make its interest on AstraZeneca public. It reaches 2nd May, 2014, when Pfizer raises its offer to £63bn to AstraZeneca. The offer was attached with the pledge for Pfizer to attach its European operations in and 20% of the merged companys workforce be located at Cambridge for the first five years. Still there was a rejection of this second offer by AstraZeneca.

AstraZeneca goes ahead on 6th May, 2014, to publish a strategy update that highlighted its drugs in development. On 7th May, there was a call to issue a stronger reassurance by Pfizer. This followed the unrest over the political pressure of job losses and cut on the UK science researchers. A day later, the former science Minister, Lord Sainsbury accuses Pfizer of being an asset stripper, hence urges that the companys takeover interest should be blocked. On 10th May, Read, in a video, on the official Pfizer website, refers to the merger as a win-win situation and prefers the use of AstraZenecas Cambridge science hub and the UKs science researchers in general.

Pascal Soriot, who is the chief executive of AstraZeneca, says the merger would risk lives by delaying drug development. Read then admits that the merger would for sure lead to job cuts and reduced research spending. The chair of this committee then writes to the science minister expressing his concerns over the merger case. On 16th May, there was an increased bid by the labors shadow business secretary to block Pfizer from the takeover. The government officials, on 18th May, agreed to amend the terms of the British governments public interest test.

In this light, only ministers were allowed to block takeovers after adequate concerns were raised against the takeover. On the same day, Pfizer raised its offer to £69.4bn which makes AstraZeneca to be very eager to get back into the negotiations. However, AstraZeneca still rejected the last offer by Pfizer on 19th May.AnalysisIt is of great concern that the UK has put measures to assess the possible effects of this takeover to ensure it is only of the interest of the nation. It is true that Pfizer is planning to apply job cuts once the takeover succeeds.

This is very inappropriate step for the British government since jobs will be lost and research will also be reduced. It, therefore, will make little economic sense to the British government if the takeover is allowed to take place.On the other hand, the takeover could have raised the position of the rating of AstraZeneca. The value of the company will increase and it will be able to increase the rate of investment in the nation. Looking at both sides of the coin, the harm that will be created when the takeover is allowed to take place will be more than the benefit it can create.

Therefore, it is best to let go the deal undone.