AstraZeneca rises as investors bet on revival of Pfizer deal

AstraZeneca P.L.C. stock has been rising for two weeks on growing expectations that the British drugmaker will reengage in merger negotiations with Pfizer Inc. after the partial expiration of a cooling-off period.

The two sides walked away from a $116 billion deal in May after failing to reach an agreement on price. Under the United Kingdom's takeover rules, AstraZeneca or New York-based Pfizer now can take the first steps toward a renewed deal. AstraZeneca's shares have gained 12 percent since the close of trading Aug. 15, a move analysts and investors attribute to bets that negotiations might be revived.

AstraZeneca has employees in Philadelphia, Fort Washington, Wilmington, and Newark, Del. Pfizer has a facility in Collegeville.

After barring talks for three months, British regulations allowed the drug companies as of Tuesday to restart them under limited circumstances.

"I'm sure they're talking privately and would prefer to keep it private, given it didn't go that well in the public markets last time," said Jeff Jonas, a portfolio manager at Gabelli Funds, which owns Pfizer stock.

Pfizer's bid for AstraZeneca was the subject of political scrutiny in Britain and the United States. The British government sought guarantees that Pfizer would preserve jobs in medical research in Britain, while American lawmakers criticized Pfizer's proposed move overseas, which would let it avoid some U.S. taxes.

Price was the biggest sticking point when talks collapsed. At the time, AstraZeneca told Pfizer that it would need to offer at least $97.69 a share, while Pfizer's final proposal was $91.30.

British rules require would-be acquirers who walk away from a bid to wait six months in most cases before making a renewed approach. As of Aug. 26, however, Pfizer may take a one-time bid it considers near-certain of success to regulators, who can approve its being presented to AstraZeneca. AstraZeneca can also invite Pfizer back to the table. In November, both companies are freed from the rules.

"I do think it's likely that the deal gets revisited by Pfizer," said Damien Conover, an analyst at Morningstar Inc., though he expected Pfizer to re-approach AstraZeneca in November rather than now.

Pfizer spokeswoman Rebecca McClure said the company's position had not changed since May, when it said it did not intend to make another offer. AstraZeneca spokeswoman Esra Erkal-Paler declined to comment on either the share price move or whether management was talking with Pfizer again.

Pfizer shares rose less than 1 percent to $29.39 at the close in New York and have gained 2.6 percent since Aug. 15.