The Financial Times reported overnight that AstraZeneca has explored acquiring Bristol Myers Squibb in a potential megadeal that would create one of the world's largest drugmakers, with a combined market capitalization of nearly $400 billion.
The report cited people familiar with the matter, while both pharmaceutical giants declined to comment. Some Wall Street desks, however, are struggling to see the strategic rationale behind such a combination.
FT reported:
The companies have held discussions about a tie-up in recent months, according to people familiar with the matter. The talks could yield a deal in the near future but may be delayed or fall apart, the people said.
Bristol, valued at about $133 billion, would expand AstraZeneca's US presence but faces looming patent expirations for Eliquis and Opdivo, which together generate roughly half its sales. AstraZeneca, worth about $264 billion, has increasingly shifted its focus toward the US while retaining its London headquarters and primary listing.
The tie-up of the two could create one of the world's biggest pharmaceutical groups, valued at nearly $400 billion, and comes after AstraZeneca completed a direct listing in New York in June.
Jefferies analysts called the potential deal a "head scratcher," while analysts at HSBC said there would be meaningful headwinds in tying up both pharma giants.
Michael Leuchten at Jefferies provided clients earlier today with a first take on the media report:
