Shares of British pharmaceutical company AstraZeneca fell 9% in London trading as markets reacted to news that the company had agreed to buy US-based Alexion Pharmaceuticals for $ 39 billion over the weekend.
Meanwhile, Alexion’s stock was up 30% at the New York open on Monday as the company, which has been under pressure to sell since May, finally found a buyer.
The cash and stock operation, the largest in AstraZeneca’s AZN,
history, Alexion ALXN values,
at $ 175 per share and was agreed by the boards of directors of both companies.
Analysts saw Alexion’s purchase price as a hefty premium over the closing price of $ 121 per share on Friday.
The acquisition of AstraZeneca is a bet on rare diseases and immunology in a year that has seen the British pharmaceutical company emerge as a leading developer of a COVID-19 vaccine.
AstraZeneca said on Saturday that Alexion shareholders will receive $ 60 in cash and approximately $ 115 in AstraZeneca stock under the terms of the agreement. If approved, Alexion shareholders will receive 2.12 of AstraZeneca’s US-listed shares for each Alexion share they hold.
The transaction remains subject to AstraZeneca and Alexion shareholder approval as well as regulatory clearances and is expected to close in the third quarter of next year.
The deal comes in a year when AstraZeneca emerged as a household name as the developer of a COVID-19 vaccine candidate with the University of Oxford.
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A big bet on rare disease and immunological drugs would allow the company to broaden its presence in the immunology industry and diversify its fast-growing anticancer drug business.
AstraZeneca said it expects to see pre-tax synergies of approximately $ 500 million annually from the transaction, as well as an immediate increase in profits. The company said it plans to incur a one-time cash cost of $ 650 million to realize the synergies.
“Alexion has established itself as a leader in complement biology, bringing life-changing benefits to patients with rare diseases,” said Pascal Soriot, CEO of AstraZeneca. “This acquisition allows us to improve our presence in immunology.”
Alexion is headquartered in Boston, Massachusetts, where AstraZeneca said it would locate a dedicated rare disease unit of the combined company.
The American pharmaceutical company’s best-selling drug is Soliris, one of the most expensive drugs in the world, used to treat paroxysmal nocturnal hemoglobinuria (PNH), a rare life-threatening blood disorder.
Alexion has been under pressure to sell himself since the beginning of this year. Hedge fund activist Elliott Associates wrote a letter to the company’s board of directors in May calling for the sale of Alexion, citing management missteps.
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“Astra has had great success with its cancer drugs and is currently in the news because it is working with the University of Oxford to develop a COVID-19 vaccine, so Alexion’s move helps with diversification,” David said. Madden, market analyst at CMC Markets UK
“The deal with Alexion is expensive as it represents a 45% premium. It is understood that the London-listed company will take out a £ 13 billion bridging loan for the transaction, ”Madden said.