Shares in British drugmaker AstraZeneca fell as much as 9% in London trading as markets reacted to news that the company had agreed to buy U.S. Alexion Pharmaceuticals for $39 billion over the weekend.
Meanwhile, Alexion stock surged 30% at the open in New York on Monday as the company, which has been under pressure to sell since May, finally found a buyer.
The cash and stock deal, the largest in AstraZeneca’s
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history, values Alexion
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at $175 per share and has been agreed upon by the boards of directors of both companies.
Analysts viewed Alexion’s purchase price as a heavy premium to its $121 per share closing price on Friday.
AstraZeneca’s takeover is a bet on rare diseases and immunology in a year that has seen the British drug company emerge as a leading developer of a COVID-19 vaccine.
AstraZeneca said on Saturday that Alexion shareholders would receive $60 in cash and around $115 in AstraZeneca stock under the terms of the deal. If approved, Alexion shareholders will receive 2.12 of AstraZeneca’s U.S.-listed shares for each Alexion share they hold.
The transaction remains subject to both 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 in which AstraZeneca has 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 immunology drugs would allow the company to broaden its footprint in immunology and diversify its fast-growing cancer drugs business.
AstraZeneca said that it expected to see pretax synergies of around $500 million a year from the transaction as well as an immediate boost to earnings. The company said it expected 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 AstraZeneca Chief Executive Pascal Soriot. “This acquisition allows us to enhance our presence in immunology.”
Alexion is based in Boston, Ma., where AstraZeneca said it would locate a dedicated rare disease unit of the combined company.
The American drugmaker’s bestselling drug is Soliris, one of the most expensive drugs in the world, used to treat paroxysmal nocturnal hemoglobinuria (PNH) — a rare, life-threatening blood disease.
Alexion has been under pressure to sell itself since earlier this year. Activist hedge fund Elliott Associates wrote a letter to the company’s board in May demanding that Alexion be sold, citing missteps by management.
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“Astra has had great success with its cancer drugs and it is currently in the news because it is working with Oxford University to develop a COVID-19 vaccine, so the Alexion move helps with diversification,” said David Madden, market analyst at CMC Markets U.K.
“The Alexion deal is pricey seeing as it represents a 45% premium. It is understood that the London-listed company will take out a £13 billion bridging loan finance to the transaction,” Madden said.