LONDON — British drug maker AstraZeneca rejected a sweetened offer from New York-based rival Pfizer, the firm said Friday.
AstraZeneca stock is down 0.2% in London; Pfizer is down 0.5% on the New York Stock Exchange.
The new offer, which came in the wake of an earlier bid rejection by Britain's second-largest pharmaceutical firm, valued AstraZeneca at 50 pounds a share ($84.47) or $106 billion.
Pfizer, which makes Viagra, had said it would seek to pay a combination of cash and shares as part of the proposal. In January, Pfizer made a bid for AstraZeneca that valued the company at just under $100 billion.
"The financial and other terms described in the Proposal are inadequate, substantially undervalue AstraZeneca and are not a basis on which to engage with Pfizer," AstraZeneca said in a statement. "The large proportion of the consideration payable in Pfizer shares and the tax-driven inversion structure remain unchanged. Accordingly, the Board has rejected the Proposal."
Earlier, Ian Read, Pfizer's chairman and chief executive, commenting on the raised offer, said: "We believe our proposal is responsive to the views of AstraZeneca shareholders and provides a sound basis upon which to arrive at recommendable terms for the combination of our two companies."
AstraZeneca's shares declined around 0.8% on the London Stock Exchange while Pfizer's New York Stock Exchange-listed pre-market shares showed little reaction to the development.
If the deal eventually goes through it would be one of the largest ever foreign takeovers of a British firm as well as one of the biggest acquisitions in the history of the drug industry.
As part of the revised offer, Pfizer contacted British Prime Minister David Cameron seeking to reassure his office over what affect a successful bid would have on the British economy, where critics fear the takeover could lead to sizable job losses.
In the letter, Pfizer vowed to keep AstraZeneca's corporate and tax residence in Britain, and promised that the "golden triangle of Oxford, Cambridge and London would represent a vital component" of the deal.
Those three cities are seen as key parts of Britain's efforts to be a world leader in science and technology.
"Pfizer's assurance (to Downing Street) over completing AstraZeneca's move to Cambridge and the promise of 20% of the combined workforce of R&D jobs staying in the U.K. will go some way to appease the government's concerns over (lost) jobs," said Mick Cooper, an analyst at Edison Investment Research.
"The size of the bid is bound also to act as a catalyst for the government to consider introducing safeguards to vet overseas takeovers of U.K. assets and companies of strategic importance," Cooper said.