GO
Loading...

Pfizer/AstraZeneca: The numbers you need to watch

Pfizer
Adam Jeffery | CNBC
Pfizer

Pfizer has been rebuffed more often than a particularly unlucky suitor in a romance novel by coy AstraZeneca, but that is unlikely to stop it coming back with a third proposal.

Here we take a quick look at which numbers really matter to the outcome of this saga.


Price tag problems

The most important figure is still being thrashed out by Pfizer and its advisers: just how far the world's largest pharmaceutical company is prepared to go to secure control of AstraZeneca. Talk of £55 per share for a third approach has been tempered to around £53 - the last bid valued the company at £50 per share.

Read MoreAstraZeneca's new attempt to foil Pfizer's plans

Sources close to Pfizer confirm that enthusiasm and the rationale for the deal still remains.

There is the $45 billion in additional annual sales which AstraZeneca thinks it can make by 2023, based on its new pipeline of medicines.

Taxing problems

Another key component will be the proportion of cash versus shares in the deal. A higher cash element than the current offer of 32 percent is more likely to gain support from shareholders.

Read MorePfizer's UK tax plans spur other U.S. companies abroad

However, there are reasons, other than just not wishing to overpay, for Pfizer not to pay out too much in cash. To ensure the deal is still as attractive in tax terms, AstraZeneca shareholders must hold at least 20 percent of the combined company. This would mean that Pfizer can go ahead with its "tax inversion."

Some smaller Pfizer U.S. shareholders may be facing a tax penalty if the deal goes through, as those who hold their shares in taxable accounts will have to pay out capital gains tax (currently 20%) on the gain in value to their shares if the deal goes through.


Ticking clock

There are also time pressures to ensure this tax advantage, as U.S. lawmakers are discussing changing rules so that, from the end of this year, the European company would have to make up 50 percent of the merged company. As U.K. takeover law means Pfizer will have to leave another six months if it doesn't get a more attractive deal by May 26, the clock is really starting to tick.

Public interest

And the other factor in play here is the 50 percent of the U.K. public, according to YouGov, which thinks the government should intervene in the bid. Next year's election is looming in the U.K., and political parties from all ends of the spectrum are looking for ways to capture the vote – and of course to secure U.K. science jobs.

Read MorePfizer-AZ sparks protectionist sound and fury

This is why both Ian Read, chief executive of Pfizer, and Pascal Soriot, his opposite number at AstraZeneca, will face two separate grillings from U.K. MPs next Tuesday and Wednesday.

Symbol
Price
 
Change
%Change
PFE
---
AZN
---

Contact M&A

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More