The announcement of the $39 billion deal for acquisition of the United States based biotech company Alexion Pharmaceuticals by the British pharma company AstraZeneca resulted in a drop of 9 per cent in the share price of the British drug maker. According ot analysts, investors were spooked by the costs for the company because of the largest ever corporate acquisition by AstraZeneca.
This deal is also one of the largest for the year, which has been a bumper year for deal making and mergers and acquisitions. It is expected that about two third of the dela will be funded with AstraZeneca shares at current market prices.
According to the deal, Alexion shareholders will get $60 in cash and about $115 worth of equity per share which works out to be at a premium of of more than $50 per share. according to experts.
The price was termed as “considerable” and “hefty” by analysts from two brokerages, Cowen and Liberum, even though they praised the quality of the assets AstraZeneca was acquiring.
At the centre of the deal are rare-disease and immunology drugs which will help AstraZeneca to broaden its drug portfolio further after the company successfully forayed into cancer treatment segment under the leadership of the company’s Chief Executive Pascal Soriot.
There were some questions raised about a possible competing bid because of the $175 per share price. However, Soriot said that there was no involvement of any competitive bidder and the deal had been arrived at through exclusive talks between the tow companies.
Stocks of Alexion also increased in value to go past $163 a share which was a clear indication of the belief of investors about the success of the deal but was well short of pricing in a bidding war. According ot the terms of the deal an amount of $1.2 billion will have to be paid by Alexion to AstraZeneca if it decides to scarp the deal.
In 2015, the stick price of Alexion was a high as $200 a share at one point in time. This deal was struck after pressure from hedge fund Elliott Management to complete a sale.
Soriot has helped AstraZenecato be portrayed as a success story in the world of pharmaceutical companies in the eight years that he has been at the helm in the company. Under his leadership, the company has increased its profits and had significantly broadened its drug and treatment portfolio.
However since hitting a peak in July, the shares of the company have now lost around 17 per cent as it was left behind in the race to develop and get regulatory approval for usage of a Covid-19 vaccine by rivals Pfizer and Moderna.
(Adapted from Reuters.com)