Sources quash rumours of an AZ/BMS mega-merger
There is no substance to the rumours of a $400 billion mega-merger between AstraZeneca and Bristol Myers Squibb, according to a source cited by Reuters.
The news agency reported today that a senior figure close to the matter said: "There is no deal between [AZ] and BMS. There never was a deal to be done, and there are no discussions between the companies."
Suggestions that there could be a return of the pharma mega-merger after years of hiatus first arose last Sunday, when both the Financial Times and Reuters said that UK-headquartered AZ and BMS of the US had been in discussions for a few months about joining together in what would be the largest-ever deal of that kind.
Shares in AZ weakened after the article ran, while BMS's stock rose slightly as analysts almost universally concluded that a merger would be good news for the US company – which is viewed as having a somewhat lacklustre pipeline compared to AZ and is also facing $30 billion patent cliff between now and 2030 affecting some of its top brands – but had little to recommend it to the UK group's shareholders other than a slightly stronger position in the US.
Added to that, mega-mergers are notoriously challenging to complete, often resulting in months of antitrust scrutiny, the need to divest overlapping products, disruption to daily operations, and the challenges associated with integrating two culturally different workforces.
In its article, Reuters said that "another person familiar with the matter said on Wednesday that no talks between the companies were currently active," adding that – given AZ is listed on the London Stock Exchange as well as the NYSE, the company would have had to make an official announcement if negotiations were ongoing.
Given that AZ's chief executive, Pascal Soriot, battled to fend off a hostile $106 billion takeover attempt by Pfizer a decade ago, making a strong case for remaining independent, some market observers were of the view that he was unlikely to have now changed his stance so completely, particularly given AZ's strong performance since then.
The company met an objective to grow its annual revenues to $45 billion by 2023, and is now in pursuit of a further hike to $80 billion by 2030, half from the US market, from a level of just over $54 billion last year. It has insisted it can achieve that with its internal operations, without a large-scale M&A deal.
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