Amid the political noise, the weakness in Pfizer's share price has received less attention than it should. Last Thursday the US group's shares were trading at $31.15 (£18.37), which was the price used in calculating the value of Friday's cash-plus-shares offer for AstraZeneca at £50. Yesterday, as Pfizer's shares dipped to $29 (£17), the value of the rejected terms fell to £47.50.
Last week's proposal was merely a sighting-shot. When Pfizer gets serious its offer will be heavier on cash, which was only one-third of the total last week. But Pfizer can't offer cash alone because flipping the tax domicile to the UK (crucial to the financial logic) requires AstraZeneca shareholders to own at least 20% of the combined new company on day one.
So Pfizer's share price will be important in this saga. Paper-backed mega-bids require momentum to keep the value of the offer rising and confidence high among the target's shareholders. That, roughly speaking, is how Vodafone forced the board of Mannesmann to capitulate back in 2000: the deal became unstoppable.
These are early days and Pfizer has plenty of cards to play, like talking up the potential cost savings (at the risk of more political grief in the UK) and putting a hard figure on the tax savings. But it can't be happy with a soggy start.
