Deals and IPOs

Pfizer on UK charm offensive as fresh AZ bid looms

Pfizer on UK charm offensive as fresh AZ bid looms

Ian Read, chief executive of Pfizer, flew into London for a round of meetings with politicians and investors ahead of an expected fresh bid for AstraZeneca, one of the U.K.'s biggest companies.

Read met U.K. Treasury chief George Osborne and other high-profile politicians Tuesday. An influential committee of backbench Members of Parliament is also expected to ask Pfizer executives to answer questions on the the deal, and its potential ramifications for U.K. jobs.

Under U.K. takeover rules, Pfizer, the world's largest pharmaceuticals company by sales, has until May 26 to make a formal offer for rival AstraZeneca. This is likely to include a bigger cash component than its initial £46.61 per share offer, which was made up of roughly 30 percent cash to 70 percent shares, sources with understanding of the deal told CNBC.

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Analysts have suggested a second offer could go as high as £55 per share, although £48 to £50 is more likely, according to a CNBC source.

Read MorePfizer's AZ offer may reach $93 per share

AstraZeneca shareholders are understood to have been supportive of management in turning down the first approach—but some are now open to hearing what Pfizer has to say, sources say. AstraZeneca management have so far declined to engage with the predatory U.S. company.

Pfizer is attracted by AstraZeneca's promising pipeline of new treatments and drugsparticularly in the immuno-oncology field, a new form of cancer treatments which essentially get the body's immune system to fight back against tumors. AstraZeneca is expected to announce promising results for several of its treatments in this space in the upcoming medical conferences season.

How AstraZeneca deal would benefit Pfizer

Another part of Pfizer's rationale for the bid is the tax savings which could result, both from avoiding tax on overseas revenues, and by incorporating a merged company in the U.K.. This part of the story has led to a debate over U.S. tax rules, with magnates like former General Electric chief executive Jack Welch weighing in over U.S. tax policy.

Read MoreJack Welch: U.S. doesn't have rational tax policy

AstraZeneca's share price, which has shot up by 23 percent since Pfizer's initial approach was reported by the U.K.'s Sunday Times less than a fortnight ago, would likely be deflated if a bid failed to emerge.

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Analysts have long considered the U.K. company as vulnerable to a takeover approach, after a difficult few years with patents expiring on key drugs and unrest among shareholders over executive pay.

"The strategic logic and financial uncertainty around AstraZeneca's ability to deliver on its strategy alone make a deal more than likely," according to pharma analysts at Credit Suisse.

Pfizer is being advised by Bank of America/Merrill Lynch, Guggenheim Securities, and JPMorgan Chase, while AstraZeneca's advisers are Robey Warshaw, Evercore Partners, Goldman Sachs, and Morgan Stanley.

By CNBC's Catherine Boyle