Shares of AstraZeneca (NYSE: AZN) fell more than 5 percent to $55.77 as MedImmune (NASDAQ: MEDI) shares jumped 18 percent to $56.59 on word AstraZeneca will acquire the vaccine and cancer-therapy developer. According to some analysts, $15.2 billion, or $58 in cash per share is just too much.
The price offered per share is a 53 percent premium over MedImmune’s closing price just before it announced it would soon be on the market, and is quite a bit more than the $38 to $44 price some analysts expected. The deal is good for MedImmune shareholders but causes some analysts confusion.
“We believe AstraZeneca is paying an extraordinary price for MedImmune, possibly due to a competitive auction. With a mature RSV franchise, questionable prospects for FluMist, and an early-stage clinical pipeline, it is difficult to rationalize today’s price,” CIBC World Markets Corp. analyst Brian Lian told Market Watch. “It’s a bit of a head-scratcher for us,” he added. The high price may pay off as a way of growth for AstraZenca- the deal, paired with another recent acquisition will boost the expansion of AstraZeneca’s biotechnology operations and will heave the company to the ranks of top European vaccine makers. “The acquisition of MedImmune significantly accelerates AstraZeneca’s biologics strategy. The combination of MedImmune with AstraZeneca’s wholly-owned subsidiary Cambridge Antibody Technology (“CAT”) will create a world-class, fully integrated biologics and vaccines business within the AstraZeneca Group with critical mass in research, development, regulatory, manufacturing and global sales and marketing reach,” AstraZeneca noted in its press release. The deal is expected to be finalized in June 2007.
