AstraZeneca to buy MedImmune for $15 billion
LONDON (Reuters) - AstraZeneca Plc (AZN.L) has agreed to buy U.S. biotechnology company MedImmune Inc. MEDI.O for more than $15 billion in its biggest transaction since the creation of the Anglo-Swedish drugs group in 1999.
The all-cash deal, announced on Monday, is the boldest move yet by AstraZeneca Chief Executive David Brennan who aims to boost the company's depleted drug portfolio by moving deeper into biotech medicine and taking a first step into vaccines.
Analysts, however, said price being paid for the maker of flu vaccines and a respiratory drug for children was steep, at nearly 11 times expected 2007 sales, and AstraZeneca shares fell more than 4 percent.
The stock was the biggest loser in the UK's FTSE-100 index, closing at 28.32 pounds, after a 14-month low of 28.20.
AstraZeneca, which also posted a slightly higher-than-expected 11 percent rise in first-quarter profit, said it would pay $58 a share in cash for MedImmune, or 53 percent above the U.S. group's share price on April 11, the day before it said it was considering a sale.
MedImmune jumped 18 percent to $56.60 in Nasdaq trade.
Analysts said the deal made long-term sense and would boost AstraZeneca's presence in biological medicines and vaccines -- two of the fastest-growing areas of drug research. But it had few near-term benefits.
"It does little to address the weakness in the Phase III pipeline and exhausts the company's cash pile for share buybacks and product acquisitions," Merrill Lynch analyst Graham Parry wrote in a research note.
A previously announced $4 billion share buyback program for 2007 remains in place but Chief Financial Officer Jon Symonds told reporters this was likely to decline in 2008.
AstraZeneca said the deal was expected to close in June 2007. The transaction values Gaithersburg, Maryland-based MedImmune at $15.6 billion, or $15.2 billion in terms of enterprise value after allowing for $340 million of net cash.
That is more than most analysts expected the company to fetch, reflecting current intense demand for biotech assets.
"AstraZeneca was never going to find assets worth owning that came at a low price," Citigroup analyst Kevin Wilson said.
ICAHN ROLE
The sale is a victory for activist shareholders whose criticism of MedImmune management's performance triggered the decision to ask Goldman Sachs Inc. (GS.N) to find a buyer for the firm.
Speculation over a disposal was fuelled after billionaire investor Carl Icahn disclosed in February he owned 2.8 million shares of the company. Continued...
