bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

sponsorType

urlAlias

moreOnThisArticles

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

SCMP Reporter

Europe recorded its largest merger to date yesterday when British pharmaceuticals group Zeneca and Swedish drugs-maker Astra agreed to create AstraZeneca, with a combined market capitalisation of US$67 billion.

 The deal transforms the two companies into one of the largest drugs firms in the world, placing it in the same league as giants such as Merck & Co of the United States, Novartis of Switzerland, and Britain's Glaxo Wellcome.

 AstraZeneca, which will be 53.5 per cent owned by Zeneca shareholders and 46.5 per cent owned by Astra shareholders, is set to save $1.1 billion per year over the next three years.

 The merger will result in 6,000 job losses worldwide at a one-off cost of $1.2 billion.

 Sir David Barnes, the chief executive of Zeneca, said: 'We have two quality companies coming together, and we will be a major force in the global pharmaceuticals industry.'   Sir David will become one of two deputy chairmen at the combined group.

 He said the group would be the third-largest drugs company in the world, and, although it would be only the 11th-largest by market capitalisation, it would still be able to compete with the major pharmaceuticals groups.

 'I am quite convinced we will be big enough, and, if you look at the sales force of the combined companies in the United States, we will be the second-largest company.'  He said Astra and Zeneca were a 'perfect fit' and that both had based their expansion over the years on natural organic growth and discovery of new drugs.

 'We both have a record of introducing new products and opening up new classes of treatment, we both have similar cultures and values, and we have known each other quite well over a number of years.'  Zeneca is best known for its cancer-treatment drug Tamoxifen and its top-selling heart drug Zestril, while Astra has been acclaimed for its Losec ulcer pill, at present the world's best-selling drug.

 Analysts said that both companies had become concerned that future revenues from the increasingly competitive European markets would decline, making it difficult to fund costly research and development projects.

 The merger follows a deal last week to create Aventis from the life-science businesses of the French group Rhone Poulenc and Germany's Hoescht.

 The recent merger between two French groups, Sanofi and Synthelabo, is seen as a product of the same consolidation pressures.

 The highly respected Swedish industry leader Percy Barnevik will become chairman of AstraZeneca, while Tom McKillop, head of Zeneca's pharmaceutical's business will become chief executive. Sir David and Astra president and chief executive Haakan Mogren will be joint deputy chairmen.

 AstraZeneca said that pro-forma pre-tax profits last year would reach $3.5 billion on sales of $15.9 billion, including pharmaceutical sales of $11.5 billion.

  It said both companies would have pumped in more than $1.9 billion into research and development investment last year.

 Shareholders yesterday endorsed the deal, sending Zeneca and Astras shares soaring.

 Swedish investment group Investor, one of Astra's largest shareholders welcomed the deal and said Investor would consider taking a larger stake in the combined entity.

 Swiss Industry Minister Bjorn Rosengren, welcoming the deal, said: 'The merger between two equal partners strengthens our business environment further in a sector which has already had a high international profile.' 



AstraZeneca joins drugs kings on US$67b merger