AstraZeneca Surges on Takeover Rumours

Weekend reports of a bid from Pfizer, and speculation that an improved bid could be in the pipeline, have sent Astra shares jumping

Holly Cook 22 April, 2014 | 11:23AM
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Shares in AstraZeneca (AZN) surged through the £40 mark in Tuesday morning trade, fuelled by weekend media reports of a potential takeover bid from Pfizer (PFE) at $100 billion (£60 billion).

While neither firm has confirmed this news, Morningstar analysts believe the acquisition would make strategic sense from Pfizer, both from a cost-cutting standpoint and as a way to increase leverage with payers. Astra reportedly resisted the approach, but market speculation that Pfizer could return with an improved bid remains rife.

Morningstar’s Damien Conover said on Monday that he doesn't foresee any major anti-trust obstacles restricting the acquisition. “A few years ago, both firms competed in the very large markets of statins and anti-psychotics, but patent losses have now created very little overlap between the firms,” he said. Conover added that the companies' late-stage pipelines have very little direct overlap, though they do target similar therapeutic classes, which could open the door for further cost synergies. “Astra's presence in immuno-oncology would significantly increase Pfizer's cancer pipeline, which is a key area Pfizer would like to address,” Conover said.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
AstraZeneca PLC8,996.00 GBX1.50Rating
Pfizer Inc43.16 USD0.70Rating

About Author

Holly Cook

Holly Cook  is Manager, Morningstar EMEA Websites