Trading places

12 December 2020 By Neil Unmack, Robert Cyran Follow @unmack1

The UK drugmaker will buy U.S. biotech Alexion, which makes treatment for a rare immune disease. It’s growing and throws off cash. Yet competitive challenges and a wayward M&A strategy have depressed its stock. That’s an opportunity and a threat for AstraZeneca CEO Pascal Soriot.

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AstraZeneca on Dec. 12 said it had agreed to buy U.S. drugmaker Alexion Pharmaceuticals for $39 billion in cash and stock in its largest-ever deal to bolster its positions in immunology and rare diseases.

Alexion shareholders will receive $60 in cash and 2.1243 AstraZeneca American Depositary Shares for each share they own. Based on AstraZeneca’s average ADS price of $54.14, the offer values each Alexion share at $175, a 43% premium to the volume-weighted average price over the previous 30 days. Alexion shareholders will own about 15% of the combined company.

AstraZeneca said it expected to deliver pre-tax synergies of $500 million per year from the combination. Marc Dunoyer, AstraZeneca’s chief financial officer, said these would be “mostly” cost savings, with the remainder coming from enhanced sales.

The British company said the deal would improve its core operating margin and strengthen its cash flow generation, giving it the option to increase its dividend in the future.

Alexion shares closed at $120.98, up 1.8%, on Dec. 11. AstraZeneca shares closed up 0.7% at 81.60 pounds.

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The British company said the deal would improve its core operating margin and strengthen its cash flow generation, giving it the option to increase its dividend in the future.

Alexion shares closed at $120.98, up 1.8%, on Dec. 11. AstraZeneca shares closed up 0.7% at 81.60 pounds.

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