The Clock Ticks On Pfizer's Bid For AstraZeneca
In an industry in which a decade can pass in the twinkling of an eye - that is generally how long it takes for a drug to be developed in a laboratory, approved by regulators and made available to patients - the board of AstraZeneca have shown themselves to be pretty nimble in the short term, too.
Leif Johansson, the chairman of AstraZeneca and Pascal Soriot, his chief executive, wasted no time this morning in rejecting a £55-a-share offer from Pfizer that the US drugs giant had declared to be its 'final' offer.
In doing so, they confounded many City observers, who had suspected that £55-a-share was the price Pfizer would need to put on the table to get the AstraZeneca board to open the company's books to its American suitor.
Pfizer will be feeling disappointed and not just because its latest offer contains an increased cash component. While the previous offer comprised only 32% cash, it is now 45% cash.
But what has let Pfizer down is the 7% fall in its own share price since it went public with its interest in AstraZeneca. This, all other things being equal, reduces the worth of its offer - quite apart from signalling that some of Pfizer's own shareholders are sceptical about this approach.
All of this means that, when Pfizer privately put a £53.50-a-share offer to the AstraZeneca board over the weekend, the board felt confident enough to say no.
It told Pfizer it would be looking for an extra 10% - in other words, a total of £58.85 a share - before it would be willing to engage.
In responding with its £55-a-share offer, which was made public without telling the AstraZeneca board, Pfizer is now gambling that AstraZeneca's shareholders - who were not consulted before the latest offer was rejected - will speak out and urge the board to come back to the table.
To that end, Monday's precipitous decline in shares of AstraZeneca may help its cause.
And Pfizer's insistence that this offer is "final" is another negotiating tactic. It can now only sweeten its terms if the AstraZeneca board recommends an improved offer or in the unlikely event of a counter-bidder emerging.
But it is by no means certain that shareholders will demand the board returns to the table.
For example, Anne Richards, the chief investment officer of Aberdeen Asset Management, one of AstraZeneca's largest shareholders, has already said that Pfizer "could do better" on price.
There are other considerations for Pfizer. If it walks away on Monday next week, which is the deadline set by the Takeover Panel for it to "put up or shut up", it will not be able to come back with another offer for a further six months.
That means it could not bid again until the end of November.
A deal of this size and complexity would take many months to complete which, in such circumstances, would leave it open to the risk of an incoming Labour government blocking the deal on public interest grounds.
A second risk is that the US government may, in the interim, act to prevent American companies from re-domiciling for tax purposes via foreign takeovers - "inversion" in the jargon - which, of course, is a major motivation for Pfizer here.
So, for Pfizer, time is of the essence.