FRANKFURT (Reuters) -Britain's AstraZeneca has agreed to buy U.S. drugmaker Alexion Pharmaceuticals in the biggest transaction ever for $39 billion, diversifying its fast-growing cancer sector in a gamble on medicines for rare diseases and immunology.
The deal comes a week after AstraZeneca said it was undertaking more testing to confirm whether its COVID-19 vaccine could be 90% successful, potentially delaying its introduction, and was introduced in Britain as a competing shot from Pfizer and approved for use in the United States.
On Saturday, the British company said Alexion shareholders will receive $60 in cash and around $115 worth of equity per share - either in ordinary shares exchanged in the UK by AstraZeneca or in American Depositary Shares denominated in dollars.
That implies a total price of $175 per share based on a reference average ADR price of $54.14. Alexion shares closed on Friday at about $121 apiece.
"It's a tremendous opportunity for us to accelerate our immunology development, enter a new disease segment, a new physician segment, and patients that we haven't been able to cover so far," AstraZeneca Chief Executive Officer Pascal Soriot said in a media call.
The best-selling drug for Alexion is Soliris, which is used against a number of unusual immune disorders, including paroxysmal nocturnal hemoglobinuria (PNH), which induces anaemia and blood clots, and whose sales increased to $3 billion in the first nine months by 3.6 percent.
AstraZeneca hopes that there is an even greater market opportunity for an enhanced form of Soliris called Ultomiris. More growth from the implementation of rare disease treatment targets to China and other emerging markets is expected.
The British business said both companies' boards had approved the deal, which is scheduled to close in the third quarter of 2021.
Once seen as leading the race to produce a COVID-19 vaccine, AstraZeneca has fallen behind Pfizer and its partner BioNTech, as well as Moderna, whose shots in late-stage clinical trials have shown greater efficacy.
Soriot is trying to leverage a strong advance in AstraZeneca stock, fuelled by the stellar growth of new cancer drugs, with a projected capital increase of about $25 billion after the completion of the transaction.
Over the past three years, stocks have risen by around 70 percent. On a much smaller scale, a precursor cash call was a $3.5 billion question last year to finance Daiichi Sankyo's purchase of rights to the cancer drug Enhertu.
Alexion shares have struggled in recent years despite raising billions in cash from therapies such as Soliris, one of the world's most expensive drugs costing hundreds of thousands of dollars per patient, as investors have worried about competition heating up.
That had caused it to be seen as a potential target for the offer.
Elliott Management, the hedge fund and activist investor, encouraged Alexion to pursue a buyer and spoke out publicly in May.
The fund, which had held private meetings with the firm, said the go-it-alone strategy of CEO Ludwig Hantson had failed to gain momentum and opposed its attempt to buy rivals to diversify its research pipeline.
In 2017, Elliott first invested in Alexion, when the share price was just marginally lower than the close of $120.98 on Friday. Elliott did not respond to a request for comment immediately.
AstraZeneca said it expected the transaction to raise core earnings immediately and generate around $500 million per year in pretax synergy gains. During the three years following completion, it also plans about $650 million in one-time cash costs.
Speaking on a call from an analyst, 61-year-old Soriot said the deal should put the rumors to rest that he was on his way out, as he was willing to remain on board to see the strategic benefits of the transaction delivered.
Soriot also told reporters that the offer was the result of exclusive negotiations and did not include a competitive bidder.
Marc Dunoyer, Chief Financial Officer of AstraZeneca, said the capital increase for the equity portion of the deal would take effect upon the completion of the agreement.
Soriot said it was not yet clear whether the business would require results from a U.S. clinical trial before applying for approval with U.S. regulators on AstraZeneca's COVID-19 vaccine.
The company should be able to send the vaccine to U.S. regulators within the next six weeks, expecting positive outcomes from the trial, he said.
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