Back to top

Image: Bigstock

Alexion (ALXN) to Be Acquired by AstraZeneca for $39 Billion

Read MoreHide Full Article

Alexion Pharmaceuticals, Inc. (ALXN - Free Report) entered into a definitive agreement with U.K.-based pharmaceutical company, AstraZeneca plc (AZN - Free Report) , whereby the latter will acquire the former. 

Per the terms, Alexion’s shareholders will receive $60 in cash and 2.1243 AstraZeneca American Depositary Shares (ADSs) for each Alexion share.

Each ADS represents one-half of one ordinary share of AstraZeneca, as evidenced by American Depositary Receipts (ADRs).

Based on AstraZeneca's reference average ADR price of $54.14, this implies a total consideration of $39 billion or $175 per share to Alexion’s shareholders. This represents a 45% premium based on the closing stock price of Alexion on Dec 11, 2020. The acquisition will enable AstraZeneca to strengthen its position in immunology. We note that AstraZeneca has a strong presence in oncology, cardiovascular, renal and metabolism, and respiratory diseases.

Alexion’s shares have gained 11.9% in the year so far compared with the industry’s growth 7.1%.

Its franchise includes blockbuster drug, Soliris (eculizumab), a first-in-class anti-complement component 5 (C5) monoclonal antibody, which is approved for the treatment of patients with paroxysmal nocturnal haemoglobinuria (PNH), atypical haemolytic uremic syndrome, generalized myasthenia gravis and neuromyelitis optica spectrum disorder. The franchise was further fortified when Alexion launched Ultomiris (ravulizumab), a second-generation C5 monoclonal antibody with a more convenient dosing regimen.

The company also boasts a deep pipeline, including Factor D small-molecule inhibitors of the alternative pathway of the complement system, an antibody blocking neonatal Fc receptor (FcRn)-mediated recycling, and a bi-specific mini-body targeting C5, among others.

The acquisition is expected to close in the third quarter of 2021. While Alexion has solid growth prospects on a standalone basis, the combination will give it a chance to globalize its portfolio further.

Moreover, upon completion, Alexion’s shareholders will own 15% of the combined company. The acquisition will also enable the company to advance its deep pipeline, as Alexion has been progressing from ultra-orphan to orphan and specialty conditions.

Alexion currently carries a Zacks Rank #3 (Hold). Two better-ranked stocks in the healthcare space are Halozyme Therapeutics, Inc. (HALO - Free Report) and Repligen (RGEN - Free Report) , both carrying a Zacks Rank #2 (Buy), presently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Halozyme’s current-year earnings estimates have been revised 21 cents upward in the past 60 days.

Repligen’s earnings per share estimates have moved up from $1.42 to $1.66 for 2021 in the past 60 days.

The Hottest Tech Mega-Trend of All

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>

Published in