Astrazeneca (AZN): Back In the M&A Frame Five Years On

Those who follow the markets and have done so for an extended period of time – say over 30 years, tend to know when deals should get over the line, and when they should not.

In the case of AstraZeneca with Pfizer in 2014, it was as clear then, as it is now that AstraZeneca should have allowed itself to be taken over by its US rival. Instead, CEO Pascal Soriot scrambled to keep his company independent and his job, having only been in the hot seat a couple of years at that point.

Winding forward to 2019 and apparently, Soriot has been vindicated, with puff pieces last month “Just The Tonic” in Sky News et al. However, it is rare that a UK company gets the scale to be a genuine multinational player on its own. In addition, the share price of the group has been disappointing, so that those who backed Soriot five years ago have been effectively sitting on dead money.

The good news though, is that Astra has a significant drugs pipeline unlike many of its larger peers. Now it is said to be being targeted by potential EU and US rivals. This is especially so given the way that the pipeline problem is much worse than it was five years ago, and regulatory issues, as well as generic competition, have also come through.

According to City sources, Astrazeneca’s advisers are now on alert to defend against an offer, one that could be north of £75 – the top end of current broker targets. Indeed, they have gone so far as to suggest that due to the lack of pipeline in the sector,  Astra could go into an auction situation. The problem is that Soriot did develop the Astra business, but was never able to extract shareholder value. This omission has now come to a head.

Author: Zak Mir

Financial commentator, interviewer, technical analyst

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