AstraZeneca investors punished the drugmaker over reports of merger talks with US rival Bristol Myers Squibb about forming what would become one of the world’s biggest pharmaceutical firms with a combined value of nearly $400 billion.
Shares in AstraZeneca were down some 6 per cent at 1230 GMT, the second-biggest drop on the FTSE 100 index, as investors and analysts said Britain’s biggest drugmaker had little need for a transformative acquisition despite potential cost benefits.
Bristol Myers shares were up about 5pc in US premarket trading.
A potential deal, as yet unconfirmed by either firm, would create the world’s fourth-largest drugmaker by market capitalisation and the largest by revenue, in potentially one of the biggest M&A deals ever, combining a top European pharmaceutical firm with a major US rival.
“The only advantage for AstraZeneca in this rumoured combination with BMS seems to be to accelerate its US footprint and sales,” said Lucy Coutts, investment director at JM Finn, an AstraZeneca shareholder.
“On balance, BMS shareholders would be the winners of any combination with AZN and so this news will undoubtedly be received coolly by AZN shareholders.”
A person familiar with the matter told Reuters that AstraZeneca and Bristol had held talks, confirming an earlier Financial Times report. On Friday, the two had a combined market capitalisation of nearly $400bn, with AstraZeneca valued at $264bn and Bristol Myers at $133bn.
An AstraZeneca spokesperson declined to comment yesterday. Bristol Myers, which is headquartered in New Jersey, did not respond to a request for comment on Sunday.
Analysts and investors questioned the logic of a deal for AstraZeneca, which has been one of the most successful companies in the sector under CEO Pascal Soriot’s 14 years at the helm.
Markus Manns, portfolio manager at Union Investment, an AstraZeneca shareholder, said a deal “does not make strategic or financial sense” and that it would disrupt a “well-run company with a full pipeline.”
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