The European pharmaceutical giant has declared that he will take over a specialist in rare diseases for 175 dollars per share.
Alastair Fair / Partner Press
39 billion dollars to buy
looks like a winner as long as he can hold that prize.
The European pharmaceutical giant said on Saturday that he will buy a rare disease specialist for $175 per share, of which just over a third will be paid in cash and the rest in shares. AstraZeneca pays a premium of 45% compared to Alexion’s closing price on Friday.
The Agreement has clear benefits for both parties. AstraZeneca’s top prize in this case is a blood disease franchise that generates approximately 5 billion dollars in annual turnover. It will stand next to Tagrisso’s as one of the company’s best-selling cancer drugs. Competition for Soliris is unlikely to come to market within a few years and patients with rare diseases have always been reluctant to switch to treatment in the past, even if a drug with higher data comes onto the market.
AstraZeneca’s recent public attention is focused on the candidate for the Covid-19 vaccine, but it is unlikely to represent a significant part of the company’s sales for some time. Alexion is much more material. AstraZeneca expects earnings per share to rise by at least 10% in the next three years. The company also stated that the acquisition supports its progressive dividend policy and ultimately signals higher payments.
As far as Alexey is concerned, despite this enormous cash flow, Alexey’s share fell by 40% from its peak in 2015. Pharmacies, which account for the majority of a product’s sales, tend to trade at low margins. In the case of Alexey, Soliris and the next generation Ultomiris account for more than 80% of his estimated income in 2020. His shares only earn ten times the adjusted earnings forecast for this year. According to this logic, these drugs are more valuable to Wall Street for a larger, more diversified company like AstraZeneca.
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Although it seems unlikely that the transaction would violate antitrust rules, the shareholders of AstraZeneca cannot yet expect this additional dividend growth. Alexion can also appeal to other fans. After all, the pharmaceutical industry does not have a shortage of large companies with long-term growth problems, but it does have a large portfolio. And the price of the deal announced on Saturday is pretty low. It will not be difficult for the interested participant to exceed this condition, although Alexion owes AstraZeneca a break of $1.2 billion in this scenario.
In today’s highly inflated market, we believe investors can demand more from AstraZeneca or another buyer, SVB analyst Jeffrey Porges wrote in his note to investors on Saturday.
Investors should therefore pay close attention to the price of Alexion when trading resumes on Monday. The harder he works, the more likely it is that the CEO of AstraZeneca…
You’ll have to sweeten the deal.
Write to Charlie Grant at [email protected]
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It was published in the printed edition of 14. December 2020 under the name AstraZenecas Alexion Splurge Could Attract a Crowd.
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