Shares in AstraZeneca rose more than 14% after US drugmaker Pfizer confirmed it is pursuing a merger deal with the second-largest pharmaceutical company in the UK.
Pfizer confirmed that it had unsuccessfully held discussions with AstraZeneca for a potential merger with the firm on two occasions, and is seeking alternatives.
AstraZeneca shares are trading up 14.4% at 8:54 am GMT.
"Pfizer Inc. confirms that it previously submitted a preliminary, non-binding indication of interest to the board of directors of AstraZeneca in January 2014 regarding a possible merger transaction," the company said in a statement.
Nevertheless, the discussions started on 5 January were discontinued on 14 January after AstraZeneca declined to pursue negotiations. Subsequently, Pfizer contacted AstraZeneca on 26 April seeking to renew discussions, but AstraZeneca again declined to engage.
Pfizer had proposed a cash and stock deal, valuing AstraZeneca at about £60bn ($100bn) or £46.61 per share, representing about 30% premium to the company's share price in early January.
"As in its previous proposal, Pfizer is considering a possible transaction in which AstraZeneca shareholders would receive a significant premium for their AstraZeneca shares, to be paid in a combination of cash and shares in the combined entity," the company said.
Pfizer noted that AstraZeneca shareholders would benefit from the transaction as they would become significant shareholders in the combined company, which is expected to produce better growth opportunities and operational and financial synergies.
"We believe patients all over the globe would benefit from our shared commitment to R&D, which is critical to the future success of the pharmaceutical industry, in the form of potential new therapies that help to fight some of the world's most feared diseases, such as cancer," said Ian Read, chairman and CEO of Pfizer.
"The combination of Pfizer and AstraZeneca could further enhance the ability to create value for shareholders of both companies and bring an expanded portfolio of important treatments to patients. A potential combination with AstraZeneca aligns with Pfizer's current structure and fully supports its existing strategy to build world-class businesses."
Pfizer added that the combined company will be incorporated in the UK if the transaction takes place. The combined company would have management in both the US and the UK, and it would maintain head offices in New York and list its shares on the NYSE.