Biotech firm AstraZeneca plc (AZN) recently announced the acquisition of biotech company Alexion Pharmaceuticals (ALXN) on Saturday 12 December. The announced transaction was large as it was worth $39 billion and that also entails a substantial premium for shareholders of Alexion.
AstraZeneca has just signed an agreement with Alexion, as the deal needs the approval of the antitrust regulators and will be completed by the third quarter of 2021 at the latest.
Compared to price on the day before the purchase announcement, AstraZeneca’s bid offer was a 45 percent premium ($175 per ALXN share). Alexion shareholders will own approximately 15 percent of AstraZeneca following the purchase.
The acquisition is costly, even for AstraZeneca, with more than $25 billion in annual revenues. However, since its vaccine has a range of advantages over its rivals, AstraZeneca would be one of the winners of the COVID-19 vaccination. For AstraZeneca, sales of the vaccine could provide additional revenue in 2021.
Around the same time, AstraZeneca will obtain a variety of unique drugs due to the purchase of Alexion, including for the treatment of rare diseases associated with metabolic disorders. In 2020, this portfolio will produce revenue of $840 million. Even during the COVID-19 crisis, such drugs sold well. In addition to this, to improve Alexion’s innovations, AstraZeneca has many more experts and financial capital.
Thus, along with high acquisition costs, the new asset greatly strengthens the long-term prospects of AstraZeneca.
At close of the trading session on Tuesday, AstraZeneca plc (AZN) stock was down -1.91% to $48.73, while Alexion Pharmaceuticals (ALXN) stock fell just -0.66% to end the session at $153.81. Since the announcement of acquisition deal, AZN shares fell about -10% while that of ALXN rose by 27%.