News & Analysis

AstraZeneca shares at highest level since December 2020 as $27.5 billion deal probed

Andrew Saks, Tuesday, 25 May 2021

AstraZeneca, one of the major global pharmaceutical firms that has been a major feature in global news broadcasts over the past few months and which has reaped huge financial rewards as a result of government policies, has today become the subject of investigation by the Competition and Markets Authority (CMA).

The CMA is a British non-ministerial government department which is responsible for strengthening business competition and preventing and reducing anti-competitive activities, and is focusing on the proposed £27.5 billion acquisition proposal of Alexion Pharmaceuticals by AstraZeneca.

There has been a large degree of criticism of  big pharmaceutical firms recently by many commentators from various industry sectors globally, with most of the finger-pointing having been centered around what critics are considering to be a monopolistic approach to the drugs market by just a few very dominant companies, and with this as a backdrop, the CMA is concerned that the mammoth takeover - the biggest ever by Astrazeneca - could harm competition in the UK or elsewhere, and is inviting comments from any interested parties up until June 3 this year.

Despite this, AstraZeneca, which entered into an agreement with North American company Alexion in December 2020, is confident that the CMA will allow the acquisition to proceed, an opinion that appears to be reflected in today's stock prices as AstraZeneca shares are trading at  £81.31 per share today, their highest point since the month in which the Alexion deal was announced.

On December 10, 2020, AstraZeneca shares were trading at £81.29 per share, just a penny below today's value.

Whilst today's values are a far cry from the lofty £91.87 reached in June 2020, the stock has been climbing steadily since it hit a low point in March this year, and has crept to its high point today after the news relating to AstraZeneca's confidence in obtaining the pending approval from the CMA to proceed to create what would become a very large pharmaceutical empire.

An AstraZeneca spokesman today told mainstream media "The commencement of the UK CMA's formal review is another important step towards closing of the proposed acquisition, which we continue to expect will be in the third quarter of 2021."

Interestingly, a dip to £80.94 occurred in the early trading hours of this morning, but that soon recovered by mid-day UK time and outstripped performance over the past two months.

The proposed takeover of Alexion was approved by Astrazeneca's shareholders earlier this month, and has already been given the green light by regulators in the US as well as in other countries including Canada, Brazil and Russia.

Volatility is still very much present, however, as the charts show a 0.28% drop between 12.00 and 12.30pm today.

Many celebrities and vaccine enthusiasts have been lobbying the major pharmaceutical companies to follow a not-for-profit model when distributing immunization drugs.

With public shareholders and responsibility to investors, it looks like that has been largely ignored and its a case of business as usual.

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