AstraZeneca is understood to be in talks to acquire US cancer drug developer Bristol Myers Squibb in a deal worth almost $400bn, according to the Guardian, but the report wiped billions off AstraZeneca's value as analysts questioned the rationale.
Key facts
- AstraZeneca is reportedly in discussions to take over US rival Bristol Myers Squibb, according to the Guardian.
- The combined group would be worth nearly $400bn (£300bn) and become the world's fourth-largest drugmaker.
- AstraZeneca shares fell 8.9%, wiping more than £17bn off the company's value on Monday.
- BMS, headquartered in Princeton, New Jersey, is known for its cancer treatments and worth $133bn (£98bn).
Britain’s biggest drugmaker, AstraZeneca, is understood to be in discussions to take over its US rival Bristol Myers Squibb (BMS) in a deal that would create a near-$400bn (£300bn) pharmaceutical group, according to the Guardian. The tie-up would rank among the biggest-ever pharmaceutical deals and would create the world’s fourth-largest drugmaker.
AstraZeneca, run by longtime chief executive Pascal Soriot, is the second-biggest listed company in the UK, with a market value of nearly £196bn before the news broke. BMS, headquartered in Princeton, New Jersey, and known for its cancer treatments, is worth $133bn (£98bn).
News of the potential merger triggered a sharp market reaction. More than £17bn was wiped off the value of AstraZeneca on Monday, according to the Guardian, with shares falling 8.9%. Earlier reporting on the same day had put the loss at more than £15bn as the story developed.
Analysts questioned the rationale for the deal, the Guardian reported, reflecting uncertainty over the strategic case for combining the two companies.
The reports remain unconfirmed by either company, and the terms, structure and likelihood of any transaction are not yet known. Both companies hold significant positions in the global pharmaceutical industry, with BMS’s cancer treatment portfolio a notable feature of its business.
Why it matters
A merger of this scale would create one of the largest pharmaceutical companies in the world, potentially affecting the development and pricing of cancer treatments. The sharp drop in AstraZeneca's share price also shows how markets can react when major deals raise questions among investors and analysts.
Frequently asked questions
How big would the combined AstraZeneca and Bristol Myers Squibb company be?
According to the Guardian, the tie-up would create a near-$400bn (£300bn) pharmaceutical group, making it the world's fourth-largest drugmaker.
How did AstraZeneca's share price react to the news?
AstraZeneca shares fell 8.9% on Monday, wiping more than £17bn off the company's value, as analysts questioned the rationale for the deal.
What is Bristol Myers Squibb known for?
BMS, headquartered in Princeton, New Jersey, is known for its cancer treatments and was worth $133bn (£98bn) before the news broke.