LONDON - The board of pharmaceutical company AstraZeneca on Friday flatly rejected drug maker Pfizer's sweetened takeover offer just hours after it was leveled, describing it as inadequate.
Pfizer Inc. (PFE), the maker of Viagra, offered 50 pounds ($84) a share in cash and stock, valuing AstraZeneca at $106 billion. The offer was a 7.3 increase on a previous bid.
AstraZeneca's board quickly issued a statement calling the terms inadequate and saying they substantially undervalue the company. The Anglo-Swedish firm said the valuable "pipeline" of new drugs it is developing would be disrupted by a takeover and its possible consequences.
"Pfizer's proposal would dramatically dilute AstraZeneca shareholders' exposure to our unique pipeline and would create risks around its delivery," said Leif Johansson, the chairman of AstraZeneca. "As such, the Board has no hesitation in rejecting the proposal."
Pfizer's bid early Friday was the third approach this year. It comes amid a spate of mergers and acquisitions in the pharmaceutical industry.
"There is a highly compelling strategic, business and financial rationale for combining our businesses, with significant benefits for shareholders and stakeholders of both companies," Pfizer CEO Ian Read said in a statement announcing the offer.
Pfizer also sent a letter to Prime Minister David Cameron, promising to keep the country's corporate and tax residence in England. It said that the "golden triangle of Oxford, Cambridge and London" -- where the bulk of British scientific research is based -- would represent a vital component of the deal.
Critics fear the takeover could mean big job cuts, and the potential loss of stature in the science sector in Britain has become a political issue.
"This does look a little bit like a transaction which has tax planning as a rationale," the opposition Labour Party's shadow business secretary, Chuka Umunna, told the BBC.
Pfizer Inc. is the world's second-biggest drugmaker by revenue while AstraZeneca PLC ranks eighth. AstraZeneca was created in 1999 through the merger of Sweden's Astra and Britain's Zeneca.