Pfizer Jilted By AstraZeneca; Analyst Sees Break-Up

The six-month saga of Pfizer's (NYSE: PFE) negotiations with AstraZeneca (NYSE: AZN) came to a crashing halt Monday with the rejection of Pfizer's $117 billion offer.

Some analysts are now suggesting a break-up could be in the cards for the U.S. pharmaceuticals giant.

Pfizer's "size is its enemy and getting smaller could unlock substantial value," Goldman Sachs analyst Jamie Rubin said in a research note.

Rubin expects a break-up might happen by 2017, and put a Buy rating on Pfizer with a $35 price target. Short-term upside for Pfizer, with 2013 revenue of $12.6 billion, includes a pipeline of vaccines for meningitis B and staph aureus, as well as a hefty cash hoard for acquisitions.

Under British rules, Pfizer can't approach AstraZeneca with another offer for at least six months. AstraZeneca can approach Pfizer after three months.

Pfizer, however, said in a statement that it didn't expect another offer. "We continue to believe that our final proposal was compelling and represented full value for AstraZeneca based on the information that was available to us," Pfizer CEO Ian Read said in a statement,

AstraZeneca's chairman, Leif Johansson said he was confident his firm had solid long-term prospects as a standalone company. The company said earlier this month it expected 2023 revenue of $45 billion, up from $25.7 billion last year, suggesting that Pfizer's proposal undervalued the company.

One of AstraZeneca's largest shareholders, Blackrock, reportedly backed the rejection of Pfizer's offer but encouraged further talks.

Hearings in British Parliament on the deal may have added fuel to disagreements. Press chatter Monday suggested hard feelings between Read and Johansson.

“We got the sense they definitely wanted to remain independent and simply didn't believe we were offering them value," Read said in an interview with Britain's Telegraph on Tuesday.

Negotiations began privately in November and went public in late April. AstraZeneca rejected a 50 pound ($80) per-share offer May 2, and Pfizer subsequently made its final offer of 55 pounds ($92) May 19.

Shares of Pfizer are trading at $29.65 Tuesday afternoon, down 0.54 percent. AstraZeneca is trading at $71.80, down 0.66 percent.