AstraZeneca jumps in US trading on Pfizer takeover speculation - UPDATE

22nd Apr 2014 06:07

US shares of AstraZeneca surged in New York on Monday on speculation that the company could be at the centre of the largest pharmaceutical takeover in history.The Sunday Times said informal talks between AstraZeneca and Pfizer had taken place in recent weeks, which saw the US pharma giant make a tentative approach for its British-Swedish rival.The approach is said to have valued AstraZeneca at $100bn (£60bn), around a 25% premium to the current share price, which would make it the biggest deal in industry history and the largest foreign takeover of a UK business ever.Pipeline of cancer drugs may hold the key While AstraZeneca reportedly rejected the informal offer, Analyst Andrew Baum from Citigroup said he expected Pfizer to "push aggressively ahead with a second approach".As well as cost savings, Pfizer is said to be interested in AstraZeneca's pipeline of cancer drugs and its expertise in autoimmune diseases.Baum said that the press report was "very likely genuine".Analysts at Credit Suisse highlight the fact that the UK firm has one of the strongest exposures of the EU majors to increased R&D productivity as the net present value (NPV) of old drugs - of the likes of Nexium, Crestor and Pulmicourt - winds down."Pipeline NPV accounts for 18% of total NPV versus 10% for EU peers [...] but key replacement assets are still early stage. AZN currently trades on a 7% discount to peers on 2014 EPS rising to a 40% premium by 2017, and on EV NPV it trades in line with peers," the broker adds.American Depositary Receipts, or ADR shares, finished nearly 9% higher at $69.10 on Wall Street on Monday. UK markets were closed for business.BC