AstraZeneca in $16bn deal for MedImmune

AstraZeneca, the Anglo-Swedish pharmaceuticals group, is to pay $15.6bn in cash to acquire MedImmune, the US biotechnology business, in a fresh consolidation of the drugs sector.

The deal, which follows a competitive auction, marks the latest bid by AstraZeneca to strengthen its pipeline of experimental drugs, expanding biological products and extending into vaccines for the first time.

The transaction, at 12 times MedImmune's annual sales and representing a 21 per cent premium on its closing share price last Friday, depressed AstraZeneca's share price in London trading by more than 4 per cent to £28.32.

It came as AstraZeneca brought forward its first-quarter results, showing earnings per share up 14 per cent to 89 cents, and formally discontinued its investment in AGI-1067, an experimental late-stage cardiovascular drug. David Brennan, chief executive, said that MedImmune's "compelling" fit with his company justified the price paid, and added: "We are satisfied with the people and the products. It makes good sense."

He said the deal built on AstraZeneca's £702m acquisition last year of CAT, reinforcing the range of technologies and products in development by providing MedImmune's manufacturing and marketing capacity for biological products.

MedImmune reported pre-tax profits last year of $75m on sales of $1.3bn, with most income coming from Synagis, its monoclonal antibody to treat a lower respiratory tract infection. It is set to launch for the coming winter a refrigerated form of FluMist, a flu vaccine that is inhaled.

The sale followed growing criticism in recent months by some of the US company's shareholders, led by billionaire Carl Icahn and Matrix Asset Management, who lobbied for a sale. Merck of the US, which has a long-standing licensing agreement with MedImmune, is believed to have opened talks about buying the group this year, triggering a series of bids from rival pharmaceuticals companies.

Jonathan Symonds, AstraZeneca's chief financial officer, said the deal would cut the scope for other such large-scale deals in the short term and might diminish significant share buy-backs after this year's pledged $4bn.