AstraZeneca $39B Acquisition of US biotech Alexion Is Well-Thought Move

UTC by Bhushan Akolkar · 3 min read
AstraZeneca $39B Acquisition of US biotech Alexion Is Well-Thought Move
Photo; AstraZeneca / Twitter

As part of the massive $39 billion deal, AstraZeneca has agreed to pay a whopping 45% of the share price of Alexion. As per analysts, this could be a win-win situation for both companies.

British pharmaceutical giant AstraZeneca Plc (LON: AZN) has announced one of its largest acquisitions in history. Last Saturday, December 12, the British drugmaker announced its acquisition of US biotech Alexion Pharmaceuticals. The deal closed for a massive $39 billion all in cash and stock.

AstraZeneca has been one of the leading forerunners in finalizing the COVID-19 vaccine. Speaking about the deal, AstraZeneca chief executive Pascal Soriot said in a statement:

“Alexion has established itself as a leader in complement biology, bringing life-changing benefits to patients with rare diseases. We look forward to welcoming our new colleagues at Alexion so that we can together build on our combined expertise in immunology and precision medicines to drive innovation that delivers life-changing medicines for more patients.”

As said, both parties have agreed to the cash and stock deal valuing Alexion at $175 per share. This is a whopping 45% premium to Alexion’s closing price on Friday. AstraZeneca CEO Pascal Soriot has been instrumental in cracking this deal. Besides, Soriot has also led the group into lucrative treatment for cancer therapies and treating blood disorders.

The Alexion deal has probably come as a surprise to AstraZeneca’s shareholders. But some industry experts believe that the timing of the deal is smart. The AstraZeneca stock is currently trading at 7,660 GBX, with a loss of over 6%.

This makes the company a good currency acquisition. Also, with the Democrats not getting control of the Senate after the recent US Presidential Elections, the chances of healthcare lawmakers putting pressure on drug prices are low.

Alexion Is a Strong Contender in the Arsenal of AstraZeneca

Quoting data from Refinitiv, the Reuters report suggests that Alexion can generate an operating profit of $4 billion by 2023. British multinational AstraZeneca sees that it can add a $500 million merger of synergies, which will be cost savings. Applying another 16% tax rate by Alexion, Soriot can expect a return of just below 10%, even after deducting the expected net cash of a massive $400 million by the end of 2020.

The latest acquisition by AstraZeneca will also help Alexion to come out of the woods after it’s not so good $8.4 billion acquisition of Synageva in 2015. Besides, the AstraZeneca management will also help to restructure operations to a large extent.

The new acquisition of AstraZeneca is likely to complete by the third quarter of 2021. Alexion chief executive Ludwig Hantson said:

“This transaction marks the start of an exciting new chapter for Alexion. We bring to AstraZeneca a strong portfolio, innovative rare disease pipeline, a talented global workforce and strong manufacturing capabilities in biologics”.

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