AstraZeneca (AZN) has said that it will benefit from Bristol-Myers Squibb's (BMS's) acquisition of Amylin Pharmaceuticals as it strengthens the leadership position of its diabetes alliance with BMS in a 'growing area of high unmet medical need'.
US biopharmaceutical giant BMS has announced on Monday that it will buy Amylin for around $5.3bn, a deal that has been unanimously recommended.
Meanwhile, BMS and AZN said that, following the completion of the acquisition, the companies will enter into collaboration agreements (similar to their existing diabetes alliance) regarding the development and commercialisation of Amylin's product portfolio.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
AZN will make a payment of $3.4bn in cash to Amylin once it becomes a wholly-owned subsidiary of BMS. Profits and losses arising from the collaboration will be shared equally.
"In addition, AstraZeneca has the option, exercisable at its sole discretion, to establish equal governance rights over key strategic and financial decisions regarding the collaboration, upon the payment to Bristol-Myers Squibb of an additional $135m. These collaboration arrangements have been approved by the boards of directors of Bristol-Myers Squibb and AstraZeneca."
Simon Lowth, the interim Chief Executive Office of AZN, said: "This is a compelling proposition that will have an immediate positive impact on revenues and is fully in line with our stated partnering strategy to enhance top-line growth and strengthen our late-stage pipeline.
[...] The combined development, regulatory and commercial strengths of the AstraZeneca and Bristol-Myers Squibb alliance for diabetes provides an excellent platform to unlock the potential of Amylin's differentiated treatments for the benefit of patients worldwide and for our shareholders," he said.
AZN said that, based on the expected timing of the close of the transaction, it will have no impact on the guidance range for core earnings per share (EPS) in 2012. It will be dilutive to AZN's core and reported EPS in 2012 and 2013, with both measures becoming accretive from 2014. "Meaningful accretion is projected thereafter".
BC
-
FTSE 100 hits record highs – why is it rising and will we see more gains?Advice UK equities have been described as unloved for a long time but as the FTSE 100 hits new highs, we explain if now is the time to buy British.
-
How to invest in copperIt may be time to invest in copper as the red metal appears poised for a big jump. Dominic Frisby looks at what should investors should buy
