The completion of a deal between AstaZeneca and Alexion this week has seen global M&A cross the $1tn mark in the 4th quarter of 2020. This is not the second consecutive quarter that has seen revenue pushed over the $1tn mark.
AstaZeneca-Alexion deal is just the latest of a barrage of M&A megadeals that have been finalized in the second half of 2020. According to data from Refinitv, deals recorded since July now total a whopping $2.1tn. AstaZeneca, the British drug giant, successfully bid $38.8 to close merger and acquisition deal with Alexion, an American pharmaceutical company based in Boston.
Highest total since 1970s
The closing of the $38.8 deal means that deals struck since July have totalled $2.1tn, almost evenly divided between the final two quarters of 2020. According to their statement released on 14 December, the data provider Refintiv have said that the $2.1tn total is the highest second half performance since the 1970s. There has been a flurry of activity within the pharmaceutical industries in 2020 thanks to the knock-on effects of the Coivd-19 pandemic. AstraZeneca are themselves in the process of creating a vaccine, however recent test results were reportedly disappointing. The deal may look good for the economy as a whole in terms of figures, however not all investors are happy.
Shareholders react badly to the deal
The $38.8 billion cash and stock deal has not sat well with a number of AstraZeneca shareholders. The main reason behind their adverse reaction to the deal is the fact that AstraZeneca’s shares took a sharp fall on Monday morning as trading opened.
At one stage on Monday, AstraZeneca shares fell as far as 7% on the London stock exchange during Monday’s trading hours, however they soon picked up slightly. The majority of AstraZeneca investors seem to be concerned that the British pharmaceutical giant has greatly overpaid for the Boston-based Alexion. AstraZeneca offered a 45% premier to Alexion’s share price, meaning they have valued the Boston-based pharma company at over 40 times its total earnings over the last 12 months.
AstraZeneca was the only known bidder
Perhaps reinforcing investor concerns is the fact that AstraZeneca was the only known bidder, despite the fact Alexion had been searching for a buyer since May at the very least. Although they were the only known bidder, it still took months of negotiating the price down before a deal was closed between AstraZeneca and Alexion. Alexion is a reputable company within the pharmaceutical industry, but investors of the Cambridge based AstraZeneca will be wondering why no one else bid if they really are as good as their reputation proclaims. Worries over the deal come just weeks after AstraZeneca’s shares fell following poor Covid-19 vaccine test results.