The largest takeover of a UK PLC is making all the business headlines, with the US pharmaceuticals company Pfizer trying to by the UK pharma company Astra Zeneca for £63 Billion.
The history of AstraZeneca is an interesting one. they formed in 1999, by the merger of the Swedish company Astra, famous for the medicine Losec, and the UK company Zeneca. Zeneca itself was created from the de-merger of the pharmaceuticals business from ICI in 1993, when ICI decided to split itself into a chemicals business (ICI) and a pharmaceuticals business Zeneca. ICI was later acquired by the Dutch company Akzo Nobel.
Today AstraZeneca is a member of the FTSE-100, the 2nd largest pharmaceutical company on the FTSE-100 after GlaxoSmithKline, today with the share price at £46 a share, it is worth £58 billion
In January this year, AstraZeneca shares were trading at about £36 a share, and now it is £46 a share. This incredible growth has been recently driven by the interest by Pfizer.
Pfizer, was founded by Charles Pfizer in New York City in 1849. today is a member of the S&P500 and the Dow 30. It has grown by massive expansion and acquisition. Famous for the medicine Viagra. Remember these names ?
Warner–Lambert (makers of Listerine mouth wash), Pharmacia and Wyeth.
To explain the size of Pfizer, look at the annual revenues: US$ 58.98 billion = £34.98 billion.
AstraZeneca‘s revenues: US$25,711 million = £15,251 million = £15 billion.
Imagine, these revenues when merged, potentially over £50 billion.
The risk is that the UK will suffer if Pfizer closes key R&D facilities, and skills like that are not easily replaced. The jewel in the crown could be the R&D pipeline or perhaps the world class R&D labs in Cambridge.
Pfizer are offering £63 billion to buy all the shares in Astra Zeneca, this is a battle that is not going to simply vanish, and more and more pharma companies could begin a merger and acquisition frenzy.