LONDON – Drug maker AstraZeneca on Saturday agreed to buy Alexion, a biopharmaceutical company, for $ 39 billion in cash and stock as corporate giants return to making large acquisitions even during the pandemic.
The deal comes as AstraZeneca is in the final stages of testing a Covid-19 vaccine it is developing with Oxford University, one of the best-known candidates – but which also had questions about its effectiveness.
With the deal for Alexion, the largest of a healthcare company this year, AstraZeneca will enhance its offering in rare diseases such as blood disorders. It is because the company’s boards of directors continued to regain confidence after the hatches were closed in the early stages of the pandemic.
Since the stock markets have risen sharply and debt financing continues to be cheap due to central bank policy, companies have resumed their pursuit of growth and scalability – also through acquisitions.
Under the terms of the contract, AstraZeneca will pay $ 60 in cash and 2.1243 of its US depository receipts for each Alexion share. That’s $ 175 per share, a premium of nearly 45 percent over Alexion’s closing price on Friday.
Headquartered in Cambridge, England, AstraZeneca has focused on cancer treatments for the past several years after losing patent protection for its best-selling drugs, such as the Crestor cholesterol treatment. In July, the company agreed to pay up to $ 6 billion to partner with Japanese drug maker Daiichi Sankyo for a possible treatment for lung and breast cancer.
But AstraZeneca has been best known in the last few months for its work in another area: Covid-19 vaccines, where it works with researchers from Oxford.
The two announced in late November that their coronavirus vaccine appears to be 90 percent effective. Unlike some other leading vaccine candidates, including those from Pfizer and Moderna, the AstraZeneca range can be manufactured in large quantities quickly, would cost only a few dollars per dose, and is easy to store for long periods of time.
However, scientists and industry experts asked questions almost immediately after AstraZeneca admitted a material error in the vaccine dosing of some study participants. The question now arises whether the effectiveness of the vaccine will be maintained with additional tests.
The deal for Alexion will help AstraZeneca expand into another sector: immunology, where treatments can be very lucrative for their manufacturers. Boston-based Alexion is known for its focus on fighting rare diseases: top medications include Soliris and Ultomiris, which treat blood disorders.
Each costs several hundred thousand dollars a year. This underpins AstraZeneca’s expectation that the deal will result in double-digit sales increases and a higher dividend payout by 2025.
“Alexion has established itself as a leader in complement biology bringing life-changing benefits to rare disease patients,” said Pascal Soriot, managing director of AstraZeneca, in a statement.
The company has been put under pressure in recent years by Elliott Management, the $ 41 billion investment firm owned by financier Paul E. Singer. The hedge fund has repeatedly criticized Alexion for its business strategy, including multi-billion dollar corporate acquisitions that have proven disappointing. (The stock fell sharply on the day Alexion announced the acquisition of Portola Pharmaceuticals in May, indicating investor dissatisfaction with the deal.)
Shortly thereafter, Elliott asked the drug maker to sell itself. A spokeswoman for the hedge fund declined to comment on Saturday.
Alexion’s shareholders are expected to own approximately 15 percent of the combined company upon completion of the transaction, which is expected by next September, subject to regulatory approvals and investors in both companies.