Britain’s AstraZeneca has agreed to buy U.S. drugmaker, Alexion Pharmaceuticals, for $39 billion in its largest-ever deal.
England-based AstraZeneca PLC, which is involved in one of the efforts to develop a COVID-19 vaccine, said on Saturday, that it’s using a combination of cash and shares for the acquisition of Boston-based Alexion Pharmaceuticals Inc.
The purchase will enable the company to diversify away from its fast-growing cancer business, in a bet on rare-disease and immunology drugs.
The deal comes in a week that AstraZeneca said it was conducting further research to confirm whether its COVID-19 vaccine could be 90% effective, potentially slowing its rollout, and as a rival shot from Pfizer was launched in Britain and approved for use in the United States.
AstraZeneca and Oxford University have jointly developed a coronavirus vaccine that British and Canadian regulators are assessing, alongside a rival effort by U.S. drugmaker, Pfizer and Germany’s BioNTech that has already earned some emergency approvals, and another by U.S. biotechnology company, Moderna.
The British company said on Saturday that Alexion shareholders would receive $60 in cash and about $115 worth of equity per share – either in AstraZeneca’s UK-traded ordinary shares or in dollar-denominated American Depositary Shares.
The British firm said the boards of both companies had approved the deal, which is expected to close in the third quarter of 2021.
What they are saying
- AstraZeneca Chief Executive, Pascal Soriot said, “It is a tremendous opportunity for us to accelerate our development in immunology, getting into a new segment of disease, a new segment of physicians, and patients we haven’t been able to cover so far.”
- Speaking on an analyst call, Soriot said the deal should put to rest speculation he was on his way out, as he was determined to stay on board to see the strategic benefits of the transaction delivered.
- Soriot also told reporters the deal was the result of exclusive talks and no competitive bidder was involved.
- AstraZeneca Finance Chief, Marc Dunoyer, said a capital increase for the equity component of the transaction would take place on closure of the deal.
- On AstraZeneca’s COVID-19 vaccine, Soriot said it wasn’t yet clear if the company would need results from a U.S. clinical trial before filing for approval with U.S. regulators.
- Assuming positive results from that trial, the company should be able to submit the vaccine to U.S. regulators within the next six weeks, he added.
What you should know
- AstraZeneca was once seen as leading the race to develop a COVID-19 vaccine, but has fallen behind Pfizer and its partner BioNTech, as well as Moderna, whose shots have shown greater efficacy in late-stage clinical trials.
- Alexion’s best-selling drug is Soliris, used against a range of rare immune disorders including paroxysmal nocturnal hemoglobinuria (PNH), which causes anaemia and blood clots, and whose revenue rose 3.6% in the first nine months to $3 billion.
- AstraZeneca hopes that an improved version of Soliris called Ultomiris has an even larger market potential. It expects more growth from introducing the target’s rare-disease treatments to China and other emerging markets.
- Worried about competition heating up, Hedge fund and activist investor, Elliott Management, has urged Alexion to seek a buyer and in May spoke out publicly.
- Elliott first invested in Alexion in 2017, when the share price was only slightly lower than Friday’s close of $120.98. Elliott did not immediately respond to a request for comment.
- AstraZeneca said it expected the deal to immediately boost core earnings and to deliver pretax synergy gains of around $500million per year. It also expects around $650million in one-time cash costs during the three years following completion.