Every passing day more and more companies are going international in order to increase their market share and many other reasons. If the company decides to grow on their own through organic growth, it will take very long time. Therefore they adopt quicker methods, which are mergers and acquisitions. An acquisition can be defined as “transfer of the control of operations and management from one firm (target) to another (acquirer), the former becoming a unit of the latter. While as merger is defined as “the combination of operations and management of two firms to establish a new legal entity”.
(Peng and Meyer, 2011 P431)
In this paper, the acquisition studied will be of two pharmaceutical companies one based in UK called AstraZeneca plc being the acquirer and the target being an US company named Ardea. AstraZeneca
AstraZeneca plc is headquartered in London, UK and operates in over 100 countries around the world and its innovative medicines are used by millions of patients making it one of the world’s largest pharmaceutical company. It is a global, innovation-driven biopharmaceutical business with a primary focus on the discovery, development and commercialisation of prescription medicines for cardiovascular, neuroscience, gastrointestinal, respiratory and inflammation, oncology and infectious disease. (www.astrazeneca.com)
While as the target company Ardea is a biotechnology company based in San Diego, California, mainly focused on the development of small-molecule therapeutics for the treatment of serious diseases. Its most advanced clinical-stage product candidates include lesinurad, a selective, oral URAT1 transporter inhibitor for the chronic management of hyperuricemia in patients with gout, and BAY 86-9766, a specific inhibitor of mitogen-activated for the treatment of cancer, being developed under a global license agreement with Bayer HealthCare AG. www.ardeabio.com . For the full year 2011, Ardea has suffered a loss of $3.26 per share which is $1.35 wider than the year-ago loss. The wider loss incurred in 2011 can be attributable to lower revenues (down 73.4% to $7.3 million) and higher operating expenses (up 37% to $94 million) as Ardea is focusing on developing its pipeline. (www.zacks.com/stock/news/71125/ardea-posts-lower-revs-wider-loss) The Acquisition
AstraZeneca PLC on June 19, 2012 announced its completion of its acquisition of Ardea Biosciences, Inc. Under the terms of the acquisition, AstraZeneca acquired Ardea for $32 a share without interest, which represented a total value of approximately $1.26 billion, including existing cash. The offer was more than 50 per cent above Ardea’s closing price of $20.84. The $1 billion net of cash deal was AstraZeneca’s biggest acquisition in five years. Both company’s boards unanimously supported the deal. The deal was expected to close in second or third quarter of 2012, subject to certain regulatory conditions, which included approval by Ardea’s shareholders. Shares of Ardea common stock ceased trading on the NASDAQ Global Select Market. (www.worldpharmanews.com)
The acquisition added Lesinurad, which is being developed as a chronic treatment of gout disease to AstraZeneca, strengthens late-stage pipeline. It believes that lesinurad, which is in Phase III, is a potential next-generation treatment and plans to file with US and European regulators in the first half of 2014. AstraZeneca has also gained oncology candidate, BAY 86-9766 which was co-developed by erstwhile Ardea Biosciences along with health care unit of Bayer and another gout candidate, RDEA3170 through the acquisition. The gout candidates will target a highly lucrative market as severity of gout is increasing in the US and other developed countries. It is estimated that the potential market is around $1 billion, with 50% of sales coming from outside the US and Europe. It is also known that the market has a huge unmet need with just Takeda...