RBC pours cold water: AstraZeneca (AZN.US) acquiring Bristol Myers Squibb (BMY.US) is "highly unlikely", with valuation disagreements and antitrust issues being the biggest obstacles
Investment bank RBC stated that the potential acquisition of Bristol-Myers Squibb (BMY.US) by AstraZeneca (AZN.US) is currently unlikely to occur.
According to Jinse Finance APP, investment bank RBC stated that a potential acquisition of Bristol-Myers Squibb (BMY.US) by AstraZeneca (AZN.US) is unlikely to happen at this time.
RBC analyst Trung Huynh wrote in a research report on Monday, "In our view, it may be very difficult for both parties to reach consensus on value perception," "AstraZeneca has previously indicated that, with its goal of reaching $80 billion by 2030, it has a clear path for independent development, while Bristol-Myers Squibb's shareholders are facing challenges from patent cliffs. In our opinion, both sides need strong economic and strategic rationale to support the merger. Before we believe the deal could happen, we need to see more substantial progress."
Prior to the release of this report, media outlets reported on Sunday that AstraZeneca and Bristol-Myers Squibb had already held preliminary talks about a potential merger, which would create one of the largest pharmaceutical companies in the world. This deal would expand AstraZeneca's market share in the United States while creating a pharmaceutical giant with a combined market capitalization close to $400 billion.
Bristol-Myers Squibb’s stock price was largely unchanged on Monday, while AstraZeneca’s shares plunged by 9%.
According to Huynh's analysis, this deal—which could take 18 months to complete—faces potential issues including antitrust risks, as the two companies have significant overlap in the oncology sector. AstraZeneca would also inherit Bristol-Myers Squibb's so-called "patent cliff" for drugs, including Eliquis (2026-2028), Opdivo (2028-2031), and Orencia (2028).
Huynh wrote in the report, "The two companies have significant overlap in oncology (particularly immuno-oncology, IO), which might trigger thorough antitrust review; we believe asset divestitures could occur." The bank gave Bristol-Myers Squibb an "equal weight" rating, with a target price of $64.
Huynh also said he’s curious to know why, after AstraZeneca previously stated it did not need large-scale mergers, it would pursue such a major deal.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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