AstraZeneca stock price falls sharply on a $39 billion bill to buy Alexion

Investors don’t seem impressed with AstraZeneca’s (LON: AZN) latest deal, which is also the biggest deal in the company’s history. 

Fundamental analysis: Hefty price paid

The British-Swedish pharma giant agreed to pay $39 billion to buy Alexion Pharmaceuticals in a major push to increase its market share in the areas of immunology and rare-disease drugs. The deal is expected to be completed in Q3 2021. 

Alexion shareholders will receive $60 in cash per share, in addition to $115 worth of equity per share to total $175 per share. This represents a premium of more than 40% compared to Friday’s closing price of $120.98.

“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,” said Pascal Soriot, CEO of AstraZeneca.

“Alexion has established itself as a leader in complement biology, bringing life-changing benefits to patients with rare diseases. This acquisition allows us to enhance our presence in immunology.”

One of the key drivers behind AstraZeneca’s push to acquire Alexion is  Soliris, a drudge used to treat paroxysmal nocturnal hemoglobinuria and other immune-disorders, as well as Ultomiris, which is a modified version of Soliris.

Some analysts believe that the price agreed price is too high. 

“If you don’t have cash, don’t buy a large company unless it is a once-in-a-lifetime opportunity and has strong strategic merits,” said Markus Manns, a senior portfolio manager at Union Investment.

“You can hardly call this deal a once-in-a-lifetime opportunity, and the strategic merits are weak.”

Technical analysis: Shares fall sharply 

AstraZeneca stock price fell about 9% initially before closing 5.74% in the red on Monday. Yesterday’s low of 7410p represents the lowest the stock traded in the last 7 months. 

AstraZeneca stock daily chart (TradingView)

More importantly, shares fell below the key short-term descending trend line (the lower purple line). The sellers are now trying to push the price action below the 61.8% Fibonacci line that sits around the 7500p handle. 

Summary

AstraZeneca agreed to buy the U.S. drugmaker Alexion Pharmaceuticals for $39 billion in the biggest-ever deal for pharma titan.

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