AstraZeneca shares slump after it agrees $39bn Alexion buyout

Britain’s biggest drugmaker offers 45% premium for shares of US rare diseases specialist

AstraZeneca shares fell sharply after it agreed to a $39bn (£29bn) takeover of the US rare diseases specialist Alexion, the biggest deal in its history if it goes ahead.

Investors sold off shares in the Anglo-Swedish drugmaker over fears it was paying too much for Alexion in the stock-and-shares deal. The offer price of $175 a share represents a 45% premium on Alexion’s closing price before the deal was announced. To finance the deal, AstraZeneca has secured a $17.5bn bridging loan.

Shares in AstraZeneca, Britain’s biggest drugmaker, closed down 6% at £76.92, making it the biggest faller on the FTSE 100. The stock soared as high as £96.39 in July when interim results showed its coronavirus vaccine generated an immune response in a study of 1,000 people.

However, this month the shares have been hit by its recent vaccine trial results and doubts over whether it will be licensed in the US, following criticism over how it conducted its clinical trials.

AstraZeneca focuses on developing medicines for cancer, as well as cardiovascular, kidney and metabolism, and respiratory diseases. It said the deal would give it a foothold in the lucrative rare diseases market. Alexion has a pipeline of 11 experimental drugs for rare diseases and its main product is Soliris, which treats a rare blood disorder.

Alexion had come under pressure from the US activist hedge fund Elliott Management to put itself up for sale in May but had not attracted any bidders until now.

Six years ago, AstraZeneca fended off a hostile bid from its US rival Pfizer. This year, AstraZeneca’s chief executive, Pascal Soriot, went looking for a big deal, and reportedly approached its US rival Gilead Sciences in May over a potential merger. As its share price soared, AstraZeneca overtook Royal Dutch Shell to become the UK’s largest company by market value in late April but has fallen back behind Shell and Unilever.

Britain’s other big pharma company, GlaxoSmithKline, has been linked with a $4.6bn bid for San Francisco-based Eidos Therapeutics. Eidos is 60% owned by BridgeBio Pharma, which wants to buy out the rest, but BridgeBio said this month that a “large international pharmaceutical company” had offered $120 a share for Eidos in late November. GSK declined to comment.

GSK has suffered a major setback in its efforts to develop a Covid-19 vaccine with its French partner Sanofi. On Friday, the companies said the jab, expected in June, would be delayed until the end of next year after trials revealed it had failed to produce a strong immune response in older people.