Pfizer back for AstraZeneca? Year-end move seen most likely

* AstraZeneca can invite Pfizer to talks from Aug. 26

* But UK drugmaker seen unlikely to make early move

* Pfizer still looking at large acquisitions

By Ben Hirschler

LONDON, Aug 21 (Reuters) - Shares in drugmaker AstraZeneca have climbed more than 7 percent this week, fuelled byspeculation of renewed takeover interest from Pfizer,following an abortive $118 billion takeover attempt in May.

But while British takeover rules mean deal talks could beback on the cards as early as Aug. 26, following the ending ofthe first of a two-stage cooling-off period, many investors andanalysts see the year-end as a more likely time for any return.

"I'm not expecting anything next week," said Dan Mahony, afund manager at Polar Capital, who increased his stake inAstraZeneca last year. "I know the stock is rallying onanticipation but I suspect if anything is going to happen it ismore likely to happen in November or December."

Pfizer Chief Executive Ian Read has made clear he is stillconsidering big deals to revive his firm's pipeline and cut itstax bill - something buying AstraZeneca would allow it to do viaa so-called inversion that would shift its tax base to Britain.

However, Read has little leverage right now. Pfizer cannottake the initiative and launch a public bid until Nov. 26 - sixmonths from when it walked away after AstraZeneca rejected itslast offer - though AstraZeneca can invite it back from Aug. 26.

British rules also allow Pfizer to make a single offer via aprivate phone call to AstraZeneca. But this single offer optionis rarely used in takeover situations as the bidder has no wayto take things further if the target simply says "no".

As a result, Pfizer would need to make a knockout offer at abig premium to its last bid of 55 pounds a share, which manyanalysts view as unlikely given Read's reluctance to close thegap in May to the 58.85 pounds AstraZeneca indicated it wanted.

CANCER DRUG HOPES

The one factor that could force AstraZeneca CEO PascalSoriot back to the table this month would be sustained pressurefrom his shareholders, a number of whom are disgruntled that helet Pfizer's offer slip away.

Yet there has been no high-profile investor rebellion so far- and Soriot has been steadily building up hopes for hiscompany's new cancer drugs, adding respiratory medicines througha deal with Almirall and putting behind him a damagingU.S. investigation into heart drug Brilinta.

AstraZeneca aims to present more convincing evidence for itsexperimental medicines at a cancer conference in Madrid in lateSeptember, and Soriot intends to highlight the potential of thefull line-up of new drugs at an investor day on Nov. 18.

The decision to time that investor event just one weekbefore Pfizer has a free hand to renew its approaches suggestsAstraZeneca is "very unlikely" to invite Pfizer to make a newoffer once the three-month cooling off period ends next week,according to analysts at Jefferies.

Political uncertainty has also played into the Britishgroup's hands to some extent, with recent U.S. threats to clampdown on tax inversions provoking fears that such tax-savingdeals may in future be blocked.

Following the failure to buy AstraZeneca in May, healthcarebankers says Pfizer has been looking at other targets.

Ireland-based Actavis would represent one goodalternative, according to analysts at Leerink, and Berenbergbelieves Pfizer could even contemplate buying AstraZeneca'slarger British rival GlaxoSmithKline.

But neither offers as good a fit as AstraZeneca, whosepipeline of immune system-boosting cancer drugs would complementPfizer's currently narrow oncology portfolio.

AstraZeneca shares were 2.2 percent high at 43.79 pounds by1250 GMT, outperforming a 0.6 percent gain in the European drugssector. (Editing by Mark Heinrich)