AstraZeneca rejects Pfizer's $118 billion dollar takeover deal

Britain's AstraZeneca on Monday rejected a sweetened and "final" offer from Pfizer, undermining the U.S. drugmaker's plan for a merger to create the world's biggest pharmaceuticals group.

The rebuff came nine hours after Pfizer said on Sunday it had raised its takeover offer to about $118 billion in total, and would walk away if AstraZeneca did not accept it.

Shares in AstraZeneca tumbled 13 percent by late morning as prospects of a takeover ebbed away.

Pfizer wants to create the world's largest drugs firm, with headquarters in New York but a tax base in Britain, where corporate tax rates are lower than in the United States. The plan has met entrenched opposition from AstraZeneca, as well as politicians and scientists who fear cuts to jobs and research.

"It died of multiple wounds. Too little cash, too many suspicions about Pfizer's motives, and too little confidence in its assurances about jobs," said Erik Gordon, professor at the University of Michigan's Ross School of Business. "Pfizer's chances are going down, despite its offer of a higher price."

AstraZeneca Chairman Leif Johansson said the company’s board thought the price offered by Pfizer – which is already a 45 percent premium over AstraZeneca’s share price – was too low.

In addition to the inadequate price, Johansson slammed the lack of industrial logic behind Pfizer's move, the risks posed to shareholders by the controversial tax plans and the threat to life science jobs in Britain, Sweden and the United States.

"Pfizer's approach throughout its pursuit of AstraZeneca appears to have been fundamentally driven by the corporate financial benefits to its shareholders of cost savings and tax minimization," Johansson said.

"From our first meeting in January to our latest discussion yesterday, and in the numerous phone calls in between, Pfizer has failed to make a compelling strategic, business or value case."

Johansson's refusal to engage in discussions angered some shareholders, with one fund manager leading up an investment in the group telling Reuters, "We do not think the Astra management have done a good job on behalf of shareholders."

Pfizer's proposed takeover would be the largest-ever foreign acquisition of a British company and is opposed by many scientists and politicians in Europe who fear it would undermine the European scientific community.

The Swedish government launched a concerted effort on Friday against a merger that it fears will lead to cuts in science jobs and research, echoing concerns aired by British lawmakers at two parliamentary hearings last week. People have also expressed fears that jobs would be cut in the U.S. as well.

British Prime Minister David Cameron had said he wanted more assurances about job retention and investment in science from Pfizer, in the event of a takeover.

The tax aspects of the deal, meanwhile, have sparked anger in the U.S., where lawmakers are now considering legislation to prevent what are known as corporate inversions, under which U.S. companies re-incorporate overseas to avoid U.S. taxes.

Al Jazeera and Reuters