AstraZeneca shares down 2% after report it approached Gilead over tie-up

Shares in Britain’s AstraZeneca fell 2.1% in early trades on Monday after a report it had approached U.S. rival Gilead Science about a possible merger to form one the world’s largest drug companies, according to Reuters.

If combined, the two companies would have a market capitalisation of about $232 billion, based on Friday’s closing share prices.

A merger would also unite two drugmakers at the forefront of efforts to fight the new coronavirus but could be politically sensitive as governments seek control over potential vaccines or treatments.

“Why would a company growing 10% plus be interested in a company growing low single digit?,” he said.

Raffat, however, added that Gilead’s low net debt position would allow the alleged suitor to pursue a highly leveraged bid and achieve an increase in earnings per share.

Early research showing that Astra’s cancer drug Calquence may help hospitalised COVID-19 patients get through the worst of the disease shored up U.S. traded Astra shares late on Friday but the positive sentiment was not sustained.

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