AstraZeneca brings in Wall Street 'defenders' amid Pfizer bid speculation

Wall Street analysts are divided on the likelihood of a new bid by Pfizer. Citi said it saw a new approach for AstraZeneca as “highly probable”. But broker Sandford Bernstein said a tie-up was “hard to believe” as such a large deal would mark a “sudden reversal” of the stated strategy of Ian Read, the Pfizer chief executive.

After two big acquisitions in the previous decade, the $56bn takeover of Pharmacia in 2002 and the $68bn purchase of Wyeth in 2009, Pfizer has opted for organic growth over blockbuster buys – though Mr Read last year refused to rule out a new deal, saying he would “never say never to a large acquisition hat made sense”. However, one source said buying AstraZeneca could be a good fit for Pfizer due to their combined strengths in the cardiovascular drugs market.

At the same time, AstraZeneca has struggled in recent years with sales falling from more than £30bn in 2011 to £25.7bn last year. Pharmaceutical industry analysts have warned that its earnings power is likely to be further eroded as older products move out of patent protection.

“The consensus AstraZeneca model is hugely dependent on pipeline assumptions, as the base business will deteriorate massively by 2020 as several key products go off patent,” said Mark Schoenebaum at ISI Group in a note to his clients.

AstraZeneca will publish its first quarter results on Thursday and will be under pressure from investors to give details of the Pfizer talks. At present both Pfizer and AstraZeneca have declined to make any public comment on the discussions.

According to unnamed sources cited by the Betaville financial blog, Pfizer is said to have offered about £50 a share for AstraZeneca. Based on last Friday’s closing price this would represent an 32pc premium and would value the company at about £63bn.

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