(Bloomberg) -- AstraZeneca Plc agreed to buy Alexion Pharmaceuticals Inc. for $39 billion in cash and shares, adding a specialist in treatments for rare diseases and immunology to its portfolio of medications for cancer and other illnesses.
The offer values Alexion at $175 a share, a 45 percent premium to the closing price on Friday. It would be the largest deal for AstraZeneca since it was founded in a combination of British and Swedish drugmakers in 1999.
Acquiring Alexion would bolster AstraZeneca in areas such as the treatment of blood disorders, building on Chief Executive Officer Pascal Soriot’s turnaround. Since taking over in 2012 he has pushed the U.K. drugmaker further into lucrative areas such as oncology. AstraZeneca, along with the University of Oxford, has also developed a Covid-19 vaccine that’s shown effectiveness in large trials, despite questions around the study results.
The deal would give AstraZeneca another toehold in the lucrative business of treating rare disorders, where high-priced medicines can generate billions in sales from a relatively small group of patients. Snapping up drugmakers that focus on more exotic diseases has been a frequently used way for larger pharmaceutical companies to purchase sales growth in recent years.
“It’s an important step in the history of the company,” Soriot said on a call with reporters. “It’s a very important moment because it’s a tremendous opportunity for us to accelerate our development of immunological” therapies.
AstraZeneca said it intends to establish its headquarters for rare diseases in Boston. There are no plans for a major reduction in employment, Soriot said.
Astra was on the hunt for acquisitions earlier this year when it had preliminary discussions with Gilead Sciences Inc., Bloomberg reported in June. A merger of the two would have ranked as the biggest deal ever in the health sector at the time. AstraZeneca fended off a takeover bid from Pfizer Inc. about six years ago.
Alexion has specialized in developing drugs that selectively inhibit immune factors to fight diseases that involve the body’s protective system. Soliris is a monoclonal antibody approved in several countries for treatment of uncommon immune-related conditions such as paroxysmal nocturnal hemoglobinuria, atypical hemolytic uremic syndrome, generalized myasthenia gravis and neuromyelitis optica spectrum disorder.
Soliris, the company’s biggest drug, had about $4 billion in 2019 revenue. More recently, Alexion launched Ultomiris, another monoclonal antibody. The company announced plans in April to conduct late-stage tests of that drug in severely ill patients with Covid.
Monoclonal antibodies like Alexion’s Soliris have garnered more attention of late because two such drugs made by Eli Lilly & Co. and Regeneron Pharmaceuticals Inc. have been given emergency authorization in the US for the treatment of Covid-19.
Alexion has been pressured in the past to put itself on the block. Activist investors Elliott Management Corp. opposed a deal the company struck earlier this year to acquire Portola Pharmaceuticals, saying the transaction didn’t make strategic sense and didn’t fit with Alexion’s focus on rare diseases.
In the sale to Astra, Alexion shareholders will receive $60 in cash and 2.1243 AstraZeneca American Depositary Shares for each Alexion share, the U.K. company said in a press release Saturday.
AstraZeneca shares have risen 7 percent this year and almost 70 percent over the past three years for a market value of $142 billion.
The acquisition is expected to close in the third quarter of 2021 and Alexion shareholders would own 15 percent of the combined companies. The deal is subject to approval by shareholders and regulators.
AstraZeneca will fund the acquisition with a $17.5 billion financing facility from Morgan Stanley, JPMorgan Chase & Co. and Goldman Sachs Group Inc. The deal will add to earnings immediately, with annual synergies of about $500 million projected three years after completion, the company said.
Evercore Partners International LLP and Centerview Partners UK LLP are Astra’s lead financial advisers. Bank of America Corp. worked with Alexion.
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