Alexion Pharmaceuticals soars 35% after AstraZeneca agrees to $39 billion takeover
- Alexion Pharmaceuticals soared 35% in pre-market trading after the announcement of its $39 billion acquisition by AstraZeneca.
- The deal has clear gains for both sides, but AstraZeneca's shares slid 6% after news of the UK firm's biggest purchase ever.
- "If you don't have cash, don't buy a large company unless it is a once-in-a-lifetime opportunity and has strong strategic merits," a portfolio manager said.
Alexion Pharmaceuticals soared 35% in pre-market trading on Monday after AstraZeneca announced a $39 billion acquisition of the Boston-based drugmaker.
The deal was approved by both boards unanimously and is expected to close in the third quarter of 2021. Alexion shareholders will own about 15% of the combined company. Two members from Alexion's board move to AstraZeneca's board.
Alexion's shares were trading at $163 per share in pre-market trading, up from $120.98 at Friday's close.
The acquisition would combine rare-disease specialist Alexion's strengths with the European drugmaker. AstraZeneca has been in the spotlight recently for its development of a coronavirus vaccine candidate with Oxford University. But the vaccine will be unable to contribute to long-term sales, prompting the need for a broader strategy.
AstraZeneca, which slumped 6% on Monday, expects the acquisition to increase earnings per share by at least 10% over the next three years. Some investors have questioned its planned strategy behind the sizeable acquisition.
"If you don't have cash, don't buy a large company unless it is a once-in-a-lifetime opportunity and has strong strategic merits," Markus Manns at Union Investment told Bloomberg. "You can hardly call this deal a once-in-a-lifetime opportunity, and the strategic merits are weak."