AstraZeneca plc (ADR) (AZN)

NetscribePhrmtcl (94.13) Submitted: 5/23/07 9:13 AM : Start Price: $51.42 AZN Score: 8.67

British drugmaker AstraZeneca is all set to acquire MedImmune for all-cash transaction with a total enterprise value of $15.2 billion. AstraZeneca will acquire all shares of MedImmune at a price of $58 per share, aggregating to a total consideration of $15.6 billion. This expensive transaction represents a premium of approximately 53% to Med Immune’s share price on April 11. The deal will significantly expands AstraZeneca’s product pipeline by adding 45 projects including 2 late-stage products and a blockbuster marketed monoclonal antibody, Synagis. The deal, which is expected to close in June comes at a time when AstraZeneca has already faced a series of research setbacks.





Although this acquisition may take a while to boost AstraZeneca’s earnings, but it brings a array of great new and growing products which would strengthen the company’s product portfolio. The acquisition will be fully funded in cash, bringing improved financial efficiency through balance sheet leverage. Moreover, the company hasn’t changed its previously announced $4 billion share buyback programme for 2007. AstraZeneca has ended collaboration with AtheroGenics on a heart-disease drug after a clinical trial failed to meet its goal.





AstraZeneca forecasts the transaction will boost earnings in 2009 and achieve $500 million in synergies by that year. The company in a move to provide a boost to its R&D activity has began construction of R&D plant near Boston. AstraZeneca has reaffirmed its EPS guidance for fiscal 2007 to be in the range of $3.80-$4.05. The strength of synergy between AstraZeneca and MedImmune should outwit the market in the coming fiscal.

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