Contrary to popular belief it takes more than money to form the basis of a long-lasting relationship, and the $120 billion that Pfizer was willing to spend was not enough to turn the head of the AstraZeneca board.
Pfizer is due to report second-quarter figures ahead of the US open on 29 July 2014. Adjusted earnings per share are expected to come in fractionally lower at $0.568, even though sales are expected to increase from $11.296 billion in Q1, up to $12.487 billion in Q2. The second-quarter pre-tax profit is expected to be $5.079 billion.
Pfizer must now decide if it is willing to wait until December before once again trying to force through a takeover of AstraZeneca. Laws in the UK on company acquisitions insist that Pfizer wait six months from its last failed attempts before trying again; unless of course the AstraZeneca board decides to come to Pfizer.
Market conditions for pharmaceutical stocks are unlikely to change too much between now and then, meaning that a higher ratio of cash-to-stock might well be required along with a higher total value. Considering the relative early stage in development of many of the AstraZeneca drugs, this will be a very big call.
As attractive as the tax benefits of this UK-based company might be, the bigger picture for Pfizer is the need to increase its US drug offerings especially as a number of its drugs are due to reach the end of their patents. Further mergers and acquisitions activity looks likely, as doing nothing does not look like an option.
Over the last couple of months the shares have gradually moved higher and are now oscillating around the 100- and 200-day moving averages. With a sizeable amount of money burning a hole in Pfizer’s pocket, it looks likely that fundamentals not technical will be driving the shares.