Hot on the heels of last week's AstraZeneca (AZN) tip (Buy, 3,754p, 16 Apr 2014), it emerged that US competitor Pfizer (NYSE: PFE) approached the drugs giant with a tentative bid offer. Pfizer is looking to make use of a $70bn (£42bn) cash pile, which won't be repatriated due to tax. Over the Easter weekend, the Sunday Times claimed the takeover offer carried a valuation of approximately £48 per Astra share, or £60bn for the company. But AstraZeneca is said to have declined the offer and terminated any ongoing talks, despite Pfizer's offer exceeding the last close of the share price by 25 per cent.
Although the chances of such a historical deal look slim, the news is a welcome boost for the sector. Big pharma has existed in a vacuum of high-profile transactions since the recession took hold. In the meantime, biotechnology minnows have stolen the spotlight, but as big pharma returns to the main stage, time could be up for their innovative cousins. The slew of biotechnology flotations in the US is grinding to a halt after the Gilead Sciences (NYSE:GILD) scandal and following Circassia's (CIR) well-received IPO in London in March, prospects closer to home look brighter.
But investors shouldn't ignore US opportunities altogether. Botox developer Allergan (NYSE:AGN) has received a $50bn offer from Canadian venture Valeant Pharmaceuticals (TSE:VRX), a valuation exceeding the unaffected share price by 30 per cent. That said, the shares reacted well to the news, soaring 20 per cent on Monday.
