Responsible Mergers and Acquisitions - Essay Example

Pfizers Bid By + Introduction The debate is going on concerning Pfizer and what it would have In terms of payment to AstraZeneca which seems to be open and straightforward in its bid of about £60 share. As it looks anything less would be a big blow to Pfizer. It was proved that Pfizer tabled £53.50 but it was not convincing AstraZeneca which demanded an additional of about 10% raising the offer to £58.85 to be admitted but the group from the US did not take it lightly but instead tabled £55 as the only offer on the table or quit which implored AstraZenecas shareholders protest against their administration. Such kind of mutiny looks scary whereby the fund managers from both Axa and Jupiter will be so disappointed according to the steps taken by AstraZeneca’s board although cannot cause an alarm to an extend resulting to resignation. Mr Lelf Johansson who is the AstraZeneca chairman said that all independent directors in most cases are paid to give their opinion, in case the shareholders seem not to like such opinion; the most likely repercussion is for them to appoint new set of directors. While at Axa together with co sulk, it is clear that Mr. Johansson and his staff should be appreciated because of the wise decision they took on behalf of their company and being calm despite of the difficult times very few company Bosses can behave the way he did to succeed. It has now become clear if not impossible that AstraZeneca’s board could manage to think of any option apart from the £55 bid if it has to maintain its credibility-at least before the set up date expires for the takeover panel. And since now Pfizer has the ability to bid even higher than £55 under the prevailing panel’s rules, the whole drama seems to be over now (Depamphilis, 2005). There is no correct explanation as to the reason leading to £60-ish would stand to be the right tag price. It’s all obvious that all manner of bid battles of which at the end the winner takes it all. The starting point for Pfizer was poor and not impressive, few considered its opening target of £50 a long shot at the moment but the offer rapidly dropped to £48 leading to the share drop down of about 6% meaning that the value of its cash together with the share proposal were affected. Under the terms it was supposed to be that the offer for each AstraZeneca shareholder to walk away with 1.845 shares as a group while £15.98 placed in cash. According to the Pfizer closing share stood at the price worthy $31.15, this means that the offer comes to about GBP50 per each available AstraZeneca share The sudden drop of share prices of Pfizer scared its shareholders a lot despite Ian Read who is the chief executives’ remarks that he is not concerned of the big deal at all and that because of him the bidders firepower has been reduced considerably when the bidding resulted to be a serious business. Pfizer started to offer the currency that was very unreliable together with its takeover-Warner, Pharmacia and Wyeth were unable to encourage confidence emphasizing on the value as the only way to employ cost cutting. This was aimed at raising high the cash value from 33% to 45% (Harrison, 2003). To stand on the defending manner, Pascal Soriot took a bold step which needs to be taken by any concerned Boss for the company’s good image, he said that AstraZeneca investors did not take time to appreciate the hard work done to store up enough drugs needed mostly the cancer portfolio, he predicted the revenues is likely to shoot high up to 75% by the year 2023. After the battle that lasted for six months, Cadbury’s board of directors engaged themselves in serious negotiations which resulted into the adoption of 840 bid per share which was valuing the business as a whole at £11.5bn. This is in addition of about 500p cash which illustrates that Kraft as a company borrows close to £7bn to take care of the deal and its share while the shareholders from Cadbury stands to receive a dividends of about 10p. the bankers are working tirelessly to finalize on the paperwork while an announcement is prepared. The high rate of borrowing witnessed to take care of the bid was a recipe Krafts concerned for its shareholders. The Buffetts Berkshire Hathaway which earlier said it did not see the need for the Kraft to give out many new shares since it argued that it was under priced, although the Kraft’s employees will be at peace due to the company’s debt payments, therefore Kraft will be in a position protect British jobs in a while both in Somerdale and Bourneville but not at Cadbury’s Uxbridge headquarters. It is estimated that Cadbury employs about 5,600 workers in both UK and Ireland whereby the jobs of about 40,000 staffs who are out of UK might not be guaranteed (Angwin, Cummings & Smith, 2011). Some people will argue on the future of British economy as being in trouble due to over dependence on her own home made chocolates but according to statistics many buyers recently come from overseas and constitute the largest contributor to the British economy compared to countries like Germany, USA and France. There was a period when British ministers bragged because the trade led to the influx of powerful managers to UK (Doole & Lowe, 2012). There was a lot of hopes that was not right about those who gave up their stakes but today the fears that exist is about price in Britain. For instance, as Kraft decides to create more jobs or rather continue with investments, its main aim is to focus on the home territory for investments which is US than Britain. And at the same time when Kraft develops some business targeting suppliers or consultations, it is likely that American firms will be given high priority first. This is the reason why foreign ownership of companies in Britain will not do good the countries populace (Cadbury, 2010). Conclusion It is seen that Kraft actions were irresponsible and not wise at all according to the statements issued in order to retain Somerdale open. A firm like kraft together with is experience and size was expected to take more responsible actions to make sound judgment especially the announcement it made which was followed by reversal, Kraft created a picture of incompetency when it came to Somerdale factory or to create a positive and smooth takeover of Kraft from Cadbury. References CADBURY, D. (2010). Chocolate wars the 150-year rivalry between the worlds greatest chocolate makers. Vancouver, Douglas & McIntyre. http://www.deslibris.ca/ID/442933. DEPAMPHILIS, D. (2005). Mergers, Acquisitions, and Other Restructuring Activities. Burlington, Elsevier Science. http://www.123library.org/book_details/?id=104846. HARRISON, C. S. (2003). The politics of the international pricing of prescription drugs. Westport, CT, Praeger. DOOLE, I., & LOWE, R. (2012). International marketing strategy: Analysis, development and implementation. Andover, Cengage Learning. ANGWIN, D., CUMMINGS, S., & SMITH, C. (2011). The strategy pathfinder: core concepts and live cases. Chichester, Wiley. Read More