AstraZeneca Agrees To Buy Alexion Pharma In $39 Bln Cash And Stock Deal

British drug major AstraZeneca Plc. (AZN.L,AZN) agreed to buy Alexion Pharmaceuticals Inc. (ALXN) for $175 per share in cash and stock, valuing the Boston-based company at $39 billion.

The deal comes amid AstraZeneca is in late-stage development of a COVID-19 vaccine in partnership with the University of Oxford.

The cash and ADS consideration represents an 45% premium to Alexion shareholders based on the closing stock price of Alexion on 11 December 2020.

AstraZeneca said said that the acquisition allows it to enhance its presence in immunology.

As per the terms of the deal, Alexion shareholders will receive $60 in cash and 2.1243 AstraZeneca American Depositary Shares or ADSs for each Alexion share.

The boards of directors of both companies have approved the acquisition. The acquisition is expected to close in third-quarter of 2021. Alexion shareholders will own about15% of the combined company.

AstraZeneca expects the combined company to deliver double-digit average annual revenue growth through 2025.

The acquisition terms provide that Alexion will be liable to pay a break fee of up to $1.2 billion to AstraZeneca in certain specified circumstances, including a change of Alexion’s board recommendation or completion of an alternative acquisition.

Meanwhile, AstraZeneca will be required to pay Alexion a break fee of $1.4 billion in certain specified circumstances, including a change of AstraZeneca’s board recommendation.

AstraZeneca said, to support the financing of the offer consideration, that it has entered into a new committed $17.5 billion bridge-financing facility, provided by Morgan Stanley, J.P. Morgan Securities plc and Goldman Sachs.

AstraZeneca expects that the acquisition will realize recurring run-rate pre-tax synergies of $500 million per year from the combined Group, generated from commercial and manufacturing efficiencies as well as savings in central costs, with full run-rate expected to be achieved by end of the third year following completion of the acquisition.

AstraZeneca expects to incur one-time cash costs of $650 million, during the first three years following completion.

Members of Alexion’s current senior management team will lead the future rare-disease activities.

Under the terms of the acquisition agreement, AstraZeneca has agreed that for 12 months following closing, it will provide the Alexion employees with the same level of salary as such employees had before closing, incentive compensation opportunities that are in the aggregate no less favorable than those provided before closing and substantially comparable benefits to those provided before closing.

The companies will mutually agree on two individuals from the Alexion board of directors who will join the AstraZeneca board as directors upon closing of the acquisition.

ALXN closed up 1.78 percent on Friday at $120.98.

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