British pharmaceutical firm Astrazeneca has rejected a final bid by Pfizer, thwarting the US giant's plans to create one of the world's largest multinational companies.
Pfizer upped its bid to £55 per share - nearly £70 billion in total - but AstraZeneca shareholders rejected the offer. The British company's bosses believed this would still constitute an undervaluing of the company and its forthcoming drugs.
Moreover, AstraZeneca claimed the introduction of life-saving medicines could be delayed by the distraction caused by the integration of the two firms.
Almost £7 billion has been wiped off AstraZeneca's share value in the wake of the unsuccessful takeover. It is now thought to be unlikely that a deal could be reached before the final deadline of May 26th.
AstraZeneca chairman Leif Johansson said: "Pfizer's approach throughout its pursuit of AstraZeneca appears to have been fundamentally driven by the corporate financial benefits to its shareholders of cost savings and tax minimisation."
"From our first meeting in January to our latest discussion [on Sunday night], and in the numerous phone calls in between, Pfizer has failed to make a compelling strategic, business or value case."
AstraZeneca is the world's seventh-largest pharmaceutical company measured by 2012 prescription drug sales and has operations in over 100 companies. Pfizer is the second-largest pharmaceutical company in the world by revenue, with a turnover of $52 billion (£31 billion).
AstraZeneca was formed in 1999 from the merger of Sweden-based Astra AB and the UK-based Zeneca Group. It currently employs 7,500 people in the UK and there were widespread fears that the takeover would lead to job losses if it went ahead.
Earlier in the month, former chief executive of AstraZeneca Sir David Barnes told the BBC he was afraid Pfizer would act as a "praying mantis" following the deal. Pfizer has previously closed down facilities acquired as part of its takeovers and Sir David said it tends to "exact destructive synergies".
Tax reasons are thought to be one of the main motivations behind the US firm's bid. While the headquarters of the company would be based in New York, its tax base would be in Britain, where corporate tax rates are lower.
Business secretary Vince Cable told MPs, in relation to the deal, that Britain would not be used as a tax haven. He said the government views the UK's future as a knowledge economy and that national interest concerns would be taken into account.
There were particular fears regarding the US company's plans to divide its business into three units following the takeover.
However, the firm pledged to maintain 20 per cent of research and development operations in the UK and safeguard the future of specific plants in Macclesfield and Cambridge.
The planned takeover has generated a huge amount of discussion in recent weeks, with politicians from both sides of the political spectrum wading into the debate.
Labour leader Ed Miliband described the American company's assurances to protect UK jobs as "worthless". He said there ought to be a public interest test in science as there is in other sectors and urged the government to block the takeover unless certain safeguards were met.
Business secretary Vince Cable said the government's position is unchanged and it is continuing to monitor the situation, the Guardian reports. He has said the government will consider plans to extend the national interest test to science companies.
Mr Cable said all options remain open but insisted the government is looking to protect the national interest in manufacturing, jobs and research and development.
Shadow business secretary Chuka Umunna welcomed the news, however, saying "While Labour was standing up for British jobs and British science, David Cameron and his ministers were cheerleading for a takeover bid where one of the primary motivations was financial engineering - cited by the AstraZeneca board as one of the execution risks justifying rejection of the bid."
He added that Pfizer should uphold its promise not to launch a hostile takeover bid and backed Ed Miliband's statement to include a public interest test in order to better protect the UK's science base.