Anglo-Swedish drugmaker AstraZeneca has agreed to buy US biotech group Alexion in $ 39 billion deal, marking the biggest deal ever by a pharmaceutical company since the start of the Covid pandemic -19.
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For Alexion, the sale follows pressure from activist hedge fund Elliott Management, who in May demanded that the company sell, citing mismanagement.
The deal announced on Saturday comes after months of speculation that AstraZeneca chief executive Pascal Soriot was looking for an important target, seeking to profit from the soaring share price that saw the British drugmaker become the one of the largest companies listed on the FTSE 100.
The deal values Alexion at $ 175 per share, a 45% premium over its Friday closing price. The shareholders of Alexion will own approximately 15 percent of the combined company.
Under the terms of the transaction, Alexion shareholders will receive $ 60 in cash and 2.12 shares of AstraZeneca’s US-listed entity for each share they hold.
The acquisition is the largest pharmaceutical transaction since 2019, when AbbVie has acquired Allergan for $ 63 billion, and the largest operation targeting an American company in any industry this year.
Alexion focuses on diseases caused by an uncontrolled activation of a part of the immune system known as the complement system that stimulates the abilities of antibodies to kill germs and promotes inflammation. Alexion has a pipeline of 11 molecules on which AstraZeneca will help build.
The UK-based company believes this approach can be applied to more common illnesses as well.
Mr Soriot said Alexion would strengthen AstraZeneca’s position in the United States, where it has rebuilt its presence in recent years, particularly in oncology. The benefits went both ways, he said. Alexion had only a limited presence in emerging markets “and almost zero presence in China”, two areas in which AstraZeneca is strong, allowing for a more efficient globalization of Alexion’s portfolio.
Mr Soriot said talks started “a few months ago” and AstraZeneca was not aware of any competing bidders. “To our knowledge, there was no competitive process,” he said.
SVB Leerink analysts said, “While we have long suggested that $ 175 is the right range for an acquisition, in today’s bloated market, we believe investors may demand more from AstraZeneca, or another purchaser. “
They added, “This is such a rare and high quality asset that in this case the final transaction price may have to reach $ 200 to satisfy Alexion’s shareholders, or be based more on cash rather than on equities. “
AstraZeneca is targeting $ 500 million in pre-tax synergies from the deal, which Soriot said would come in part from downsizing in general administrative functions. Alexion has around 3,000 employees, while AstraZeneca has around 70,000.
The companies said they expected the acquisition to close in the third quarter of next year.
“When you conclude that the combination will be good and work well, you do so when the opportunity presents itself,” said Soriot, when asked about the interaction of the coronavirus pandemic and the deal.
AstraZeneca became the University of Oxford’s partner for the development of a coronavirus vaccine earlier this year. He has pledged to sell it at cost during the pandemic, and at no profit to developing countries in perpetuity. It has no native vaccine activity, instead focusing on R&D in areas such as oncology.
Peer-reviewed data released this month showed an overall average efficacy of 70%, lower than vaccines made by competitors. Observers have questioned the data, although any vaccine with more than 50 percent effectiveness is still on the verge of approval by European and US regulators.
Mr Soriot said he expected AstraZeneca to be able to file for regulatory approval for the vaccine in the United States within six weeks and that approval from some jurisdictions was expected before the end of the year.
Evercore and Centerview Partners were AstraZeneca’s main financial advisers, while Ondra provided financial market advice. Morgan Stanley, JPMorgan and Goldman Sachs will help AstraZeneca finance the transaction. Freshfields was legal counsel to AstraZeneca. Bank of America advised Alexion and Wachtell provided legal advice.