AstraZeneca to Buy ZS Pharma for $2.7 Billion in Cash Dealby
ZS Pharma's board of directors agrees to transaction
Proposed deal price is 42% premium to yesterday's close
ZS Pharma investors will get $90 per share, London-based AstraZeneca said in a statement. That’s a 42 percent premium to yesterday’s close. The board of San Mateo, California-based ZS Pharma agreed to the transaction.
The transaction would give the U.K.’s second-largest drugmaker ZS Pharma’s ZS-9, a medicine with high sales potential at a time when its own blockbusters, such as the Nexium antacid and the heart drug Crestor, reach the end of their patent-protected life. Actelion in September said it had held talks with the U.S. company, which has no revenue yet but whose product has passed all three levels of clinical tests.
“It makes sense with some of the opportunities they have in their own late-stage pipeline,” said Johan Unnerus, an analyst at Swedbank in Stockholm. “Over the past two years, the industry has moved more toward niche opportunities.”
AstraZeneca Shares Slump
Actelion is one of the drugmakers that’s turned a medicine for a rare disease -- the lung drug Tracleer -- into a blockbuster.
AstraZeneca shares slumped 0.6 percent to 4,222.50 pence at 10:11 a.m. in London trading. Actelion rose 0.9 percent to 139.80 Swiss francs.
ZS Pharma dropped 3.1 percent on Thursday to close at $63.31, taking its market value to $1.59 billion. The stock began trading in June 2014 following a $112 million initial public offering and raised an additional $174 million in a March share sale.
The experimental treatment ZS-9, for a life-threatening condition called hyperkalaemia, was submitted to the U.S. Food and Drug Administration in May and will be filed to European regulators by the end of the year. Sales may exceed $1 billion, according to AstraZeneca.
ZS Pharma and its 200 employees will become a wholly owned subsidiary of AstraZeneca after the transaction. The deal will generate sales from next year and contribute to a profit measure AstraZeneca calls core earnings from 2018. There will be “minimal earnings dilution” in 2016 and 2017, the company said.
Hyperkalaemia is a condition in which there’s too much potassium in the blood, which can lead to chronic heart failure or chronic kidney disease. AstraZeneca has a medicine in advanced tests that targets anaemia associated with chronic kidney disease, called roxadustat.
“This acquisition complements our strategic focus on cardiovascular and metabolic disease by adding a potential best-in-class treatment to our portfolio of innovative medicines,” AstraZeneca Chief Executive Officer Pascal Soriot said in the statement.
The transaction is expected to close by the end of the year. The companies didn’t disclose their advisers.