This Rumor Seems Pretty Implausible... They Compete Head To Head In Oncology -- So Vast Divestitures Would Be Required. Timing Seems... Off, Too.

As purported M&A market rumors go, this one in particular seems to strain the far edge. . . of credulity.

But as is more than occasionally the case -- it only takes one wild eyed pundit to start a "silly-news cycle" -- for at least 24 to 48 hours. This seems to be the case here.

The most salient reason to doubt it could actually transpire would be the manifold antitrust objections in the UK, US, EU and Japan. These companies are head-to-head competitors in oncology and cardiovascular medicines -- and on a vast scale. Sure -- there are other, even larger, competitors -- but sorting out the thicket of overlapping jurisdictional objections might take three or four years, all by itself. [Really -- can anyone imagine responsible regulators in the UK, and EU and Japan. . . agreeing on much of anything -- with Tangerine 2.0's DoJ / Antitrust / FTC divisions? Me either.]

So, were a deal to occur, the combined company would scarcely resemble the two constituent parts (but for BMS, that may be the attraction, to be fair). In sum, AZ really has no need for this wildly large a deal -- of any sort -- unless there is much Pascal Soriot has been lying to the world about (highly unlikely).

So -- color us. . . decidedly skeptical, here.

In any event, here is just some of the "at best, a rumor" now being reported in the financial press, around the globe this Monday AM:

. . .While details of the talks remain scarce and sources told the FT that a deal may never materialize, analysts questioned why AstraZeneca -- whose market value has surged under CEO Pascal Soriot on the back of a strong drug pipeline -- would pursue such a transaction.

AstraZeneca’s London-listed shares were last seen trading 4.7% lower, weighing on the U.K.’s blue-chip index FTSE 100, which was largely flat.

Shares of Bristol Myers rose 6% in U.S. premarket trading.

Coming into Monday trading, AstraZeneca had a market cap of $264 billion. That number has risen steadily over the past decade and since CEO Pascal Soriot took the reins in 2012 as the company has developed a solid pipeline of new drugs. It is targeting $80 billion in sales by 2030, up from $58.7 billion last year.

Bristol Myers’ market cap is roughly $133 billion, and the company is facing loss of exclusivity for multiple drugs. It’s expected to see declining growth from next year as patents expire and top-selling drugs like its blood thinner Eliquis and cancer medicine Opdivo will start to face generic competition.

Analysts were puzzled by both the news itself, as well as the timing of it.

“Given the strength of AZ’s growth and innovation profile, we are a bit perplexed,” Jefferies analysts wrote Monday morning. “Of course financial accretion can look good and maybe more cash generation would allow for more R&D. But if there is one company that doesn’t need financial engineering, it’s AZ. . . .”

There you have it -- Soriot simply has no need to do this deal. Onward, smiling into the sunshine -- this beat is rarely cloaked in dull moments, to be certain! Yup.

नमस्ते