Pfizer Confirms Prior Discussions with AstraZeneca Regarding a Possible Combination and Its Continuing Interest in a Possible Merger Transaction


Pfizer Inc. confirms that it previously submitted a preliminary,
non-binding indication of interest to the board of directors of
AstraZeneca in January 2014 regarding a possible merger transaction.
After limited high-level discussions, AstraZeneca declined to pursue
negotiations. The discussions were discontinued on 14 January 2014 and
Pfizer then ceased to consider a possible transaction. In light of
recent market developments, Pfizer contacted AstraZeneca on 26 April
2014 seeking to renew discussions in order to develop a proposal that
could be recommended by both companies to their shareholders.
AstraZeneca again declined to engage. Pfizer is currently considering
its options with respect to AstraZeneca.

Pfizer’s previous proposal made to the board of AstraZeneca on 5 January
2014 included a combination of cash and shares in the combined entity
which represented an indicative value of £46.61 ($76.62)per
AstraZeneca share and a substantial premium of approximately 30% to
AstraZeneca’s closing share price of £35.86 on 3 January 2014.

As in its previous proposal, Pfizer is considering a possible
transaction in which AstraZeneca shareholders would receive a
significant premium for their AstraZeneca shares, to be paid in a
combination of cash and shares in the combined entity. Pfizer believes
that a transaction, if proposed and consummated, would offer AstraZeneca
shareholders a highly compelling opportunity to realise a significant
premium to the undisturbed AstraZeneca share price as of 17 April 2014,
which includes a substantial cash payment. AstraZeneca shareholders
would become significant shareholders in the combined company and
participate in significant value creation opportunities, including
benefiting from the potential growth opportunities and operational and
financial synergies that the combination of two complementary global
pharmaceutical companies would be expected to generate. Pfizer is
confident a combination is capable of being consummated. The
transaction, if consummated, is expected to result in the combination of
the two companies under a new U.K.-incorporated holding company. As a
global corporation, Pfizer would expect the combined company to have
management in both the United States and the United Kingdom, and to
maintain head offices in New York and list its shares on the New York
Stock Exchange.

The making of any firm offer by Pfizer would be subject to the following
pre-conditions (which may be waived in whole or in part by Pfizer):

Commenting on the possible transaction, Ian Read, Chairman and CEO of
Pfizer, said:

“We have great respect for AstraZeneca and its proud heritage as an
innovation-driven biopharmaceutical business with a rich science-based
foundation in both the United Kingdom and Sweden. In addition, the
United Kingdom has created attractive incentives for companies to
manufacture products and maintain and protect intellectual property, and
we have seen that capital and jobs have followed these types of

“We believe patients all over the globe would benefit from our shared
commitment to R&D, which is critical to the future success of the
pharmaceutical industry, in the form of potential new therapies that
help to fight some of the world’s most feared diseases, such as cancer.

“The combination of Pfizer and AstraZeneca could further enhance the
ability to create value for shareholders of both companies and bring an
expanded portfolio of important treatments to patients. A potential
combination with AstraZeneca aligns with Pfizer’s current structure and
fully supports its existing strategy to build world-class businesses.
The combination would complement our two innovative businesses and our
Global Established Pharmaceutical business, allowing us to maintain the
flexibility for the potential future separation of our businesses whilst
at the same time broadening our pipeline breadth and potential new
product launches over coming years. We believe that a transaction would
further strengthen our ability to generate strong and consistent cash
flow, targeted for both investment in our business and return to
shareholders, while at the same time offering an efficient operating
structure and the anticipated realization of attractive synergies.

“As always, we continue to focus on value creation and will be
disciplined in our approach to capital deployment. Pfizer has a proven
track record of successful acquisitions and, if a transaction were
consummated, would use its extensive integration experience to support a
successful combination of the businesses and focus on delivering value
to shareholders.”

Pfizer believes the strategic, business and financial rationale for a
transaction is compelling. Pfizer believes the possible combination
would create a highly complementary mapping of products, pipeline and
operating assets to Pfizer’s new operating structure, providing
additional critical mass to all business segments and strong cash flow

The possible transaction is expected to be accretive to Pfizer’s
adjusted diluted earnings per share in the first full year
following the combination. In addition, Pfizer has a track
record of realising operational synergies and delivering meaningful
value accretion for shareholders in prior transactions of a similar type
and scale. Pfizer believes that synergies would be achieved through the
combination of the two companies’ operations and that the combination
would enable greater capital efficiency and a more efficient tax
structure. In particular, the currently contemplated structure under a
new U.K.-incorporated holding company would not subject AstraZeneca’s
non-U.S. profits to U.S. tax, which would be in the best interests of
the combined company’s shareholders.

The completion of a possible transaction is subject to the approval of
Pfizer’s shareholders and is expected to be a taxable event to Pfizer’s

Pfizer reserves the right to introduce other forms of consideration
and/or vary the mix of consideration and waive in whole or in part any
of the pre-conditions to making an offer.

Pfizer reserves the right to make an offer for AstraZeneca at any time
for less than the equivalent of £46.61 ($76.62) for each AstraZeneca

(i) with the agreement or recommendation of the AstraZeneca board;

(ii) if a third party announces a firm intention to make an offer for
AstraZeneca which, as at the date Pfizer announces a firm intention to
make an offer for AstraZeneca, is valued at a lower price than the
equivalent of £46.61 ($76.62) for each AstraZeneca share;

(iii) following the announcement by AstraZeneca of a whitewash
transactionpursuant to the Code; or

(iv) in the event that any AstraZeneca dividend is declared, made or
paid in excess of what is expected by the consensus analyst forecasted
dividends of 53.6 pence per share due to be announced by
AstraZeneca on 31 July 2014, a £ for £ adjustment reduction equal to the
excess amount.

The deadline set by Rule 2.6(a) of the Code (the “Deadline”) requires
Pfizer either:

(i) to announce a firm intention to make an offer for AstraZeneca under
Rule 2.7 of the Code; or

(ii) to announce that it does not intend to make an offer for
AstraZeneca, in which case the announcement will be treated as a
statement to which Rule 2.8 of the Code applies,

by not later than 5.00 pm on 26 May 2014, save where either:

(i) AstraZeneca and the Takeover Panel have consented to an extension of
the Deadline; or

(ii) the Deadline does not apply, or ceases to apply, by virtue of Rule
2.6(b) (a firm intention to make an offer for AstraZeneca under Rule 2.7
of the Code being announced by an offeror (other than Pfizer) prior to
the Deadline).

A copy of this announcement will be available on Pfizer’s website at

Pfizer will hold an analyst and investor call in respect of this
announcement today at 8:30 a.m. EDT (1:30 p.m. BST). A live and recorded
webcast will be available from

Telephone dial in details (listen only) are as follows:

U.K. toll free: (0) 800 028 8438U.S. toll free: +1 (866) 246-2545International:
+1 (706) 634-2365Meeting I.D.: Pfizer Meeting 2

An audio replay of the analyst and investor call will be available for
48 hours from the following dial-in numbers:

U.K.: (0) 800 917 2646U.S. toll free: +1 (855) 859 2056International:
+1 (404) 537 3406Conference ID: 36646191

Based on Pfizer’s closing share price of $30.52 on 3
January 2014 and the exchange rate of $1.00:£0.6083.

“Adjusted Income” and its components and “Adjusted Diluted
Earnings Per Share (EPS)” are defined as reported U.S. generally
accepted accounting principles (GAAP) net income and its components and
reported diluted EPS excluding purchase accounting adjustments,
acquisition-related costs, discontinued operations and certain
significant items. Pfizer’s management uses adjusted income, among other
factors, to set performance goals and to measure the performance of the
overall company. Pfizer believes that investors’ understanding of its
performance is enhanced by disclosing this measure. The adjusted income
and its components and adjusted diluted EPS measures are not, and should
not be viewed as, substitutes for U.S. GAAP net income and its
components and diluted EPS.

This is not a statement regarding Pfizer’s expectations for
its earnings per share for 2014 or subsequent periods.

Broadly, a whitewash transaction is one in which a person,
alone or together with parties concerted with such person, acquires or
consolidates control in AstraZeneca pursuant to the acquisition of
shares issued by AstraZeneca.

On the basis of the median consensus analyst forecast full
year dividend of $2.80 per share, the split of first interim dividend
and second interim dividend over the previous two years, and an exchange
rate of $1.00:£0.5951.

Chuck Triano, +1 212 733 3901Ryan
Crowe, +1 212 733 8160orJoan Campion,
+1 212 733 2798Andrew Topen, +1 212 733 1338orAndrew Widger, +44 1737 330 909orFares NoujaimAdrian MeeMichael
FindlayGeoff Iles+44 (0) 20 7996 1000orAlan SchwartzKen SpringerJim Ferency+1
212 901 9371orSteve FrankLaurence
HollingworthMark BreuerChristopher Dickinson+44 (0) 20
7742 4000

Source: Pfizer