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* Astra to pay $60 in cash, $115 in equity per Alexion share
* To finance equity component with capital increase
* Expects deal to immediately boost core earnings
(Adds detail, background)
By Ludwig Burger
FRANKFURT, Dec 12 (Reuters) - Britain's AstraZeneca
has agreed to buy U.S. drugmaker Alexion Pharmaceuticals
for $39 billion in its largest- ever deal to bolster
its positions in immunology and rare diseases.
The deal comes in a week that AstraZeneca said it was
conducting further research to confirm whether its COVID-19
vaccine could be 90% effective, potentially slowing its rollout,
and as a rival shot from Pfizer was launched in Britain
and approved for use in the United States.
The British company said on Saturday that Alexion
shareholders would receive $60 in cash and about $115 worth of
equity per share - either in AstraZeneca's UK-traded ordinary
shares or in dollar-denominated American Depositary Shares.
Based on a reference average ADR price of $54.14, that
implies a total price of $175 per share. Alexion shares closed
at around $121 apiece on Friday.
"It is a tremendous opportunity for us to accelerate our
development in immunology, getting into a new segment of
disease, a new segment of physicians and patients we haven’t
been able to cover so far," AstraZeneca Chief Executive Pascal
Soriot told a media call.
The British firm said the boards of both companies had
approved the deal which, subject to regulatory and shareholder
approval, is expected to close in the third quarter of 2021.
AstraZeneca was once seen as leading the race to develop a
COVID-19 vaccine, but has fallen behind Pfizer and its partner
BioNTech, as well as Moderna, whose shots
have shown greater efficacy in late-stage clinical trials.
RARE DISEASES
Alexion generates billions in cash from its rare disease
treatments and sells one of the costliest drugs in the world -
rare blood disease treatment Soliris - which can cost hundreds
of thousands of dollars per patient.
However, its shares have struggled in recent years as
investors have worried whether it would be able to sustain
revenues if competition heats up - a stock market performance
that has made it seen as a possible bid target.
Hedge fund Elliott Management, one of the world's most
powerful activist investors, had for months been urging Alexion
to seek a buyer and in May spoke out publicly one day before the
company’s annual shareholder meeting.
The fund, which had held private meetings with the company,
said CEO Ludwig Hantson’s “go-it-alone” approach had failed to
gain traction and that its plan to buy rivals to diversify its
research pipeline were heading in the wrong direction.
Elliott first invested in Alexion in 2017 when the share
price was only slightly lower than Friday's close of $120.98.
Elliott did not immediately respond to a request for comment.
AstraZeneca said it expected the deal to immediately boost
core earnings and to deliver pretax synergy gains of around $500
million per year. It also expects around $650 million in
one-time cash costs during the three years following completion.
Soriot told reporters the deal was the result of exclusive
talks and no competitive bidder was involved.
AstraZeneca finance chief Marc Dunoyer said a capital
increase for the equity component of the transaction would take
place on closure of the deal.
On AstraZeneca's COVID-19 vaccine, Soriot said it wasn't yet
clear if the company would need results from a U.S. clinical
trial before filing for approval with U.S. regulators.
Assuming positive results from that trial, the company
should be able to submit the vaccine to U.S. regulators within
the next six weeks, he added.
(Additional reporting by Rebecca Spalding, Svea Herbst-Bayliss
and Aishwarya Nair
Editing by Mark Potter and David Holmes)
