AstraZeneca share price is the worst-performer in the FTSE 100 today. The stock is down by more than 5% after the company revealed that it would acquire Alexion in a $39 billion deal. Other top laggards in the FTSE are Fresnillo, PolyMetal, and BHP.
Why is AstraZeneca share price falling? AZN shares are falling partly because of the company’s decision to spend $39 billion to acquire Alexion, an American company valued at more than $26 billion. This acquisition, therefore, gives a $13 billion premium on the company. Some investors believe that the company has overpaid.
The deal will give AstraZeneca a foothold in the vital blood disorder business that has more than $5 billion in annual sales. This would be on the same level as Tagrisso, a popular drug manufactured by Astra.
Are more bidders likely? Another reason why AZN share price is falling is because some analysts expect the firm to attract more bidders, which will raise the acquisition price. Furthermore, most of the deal will be financed by AstraZeneca’s stock. Therefore, another deep-pocketed rival could place a counter-offer.
Further, investors are questioning Alexion’s pipeline since it makes most of its money from the blood disorder drug. In summary, this acquisition is mostly a merger arbitrage opportunity, where investors usually sell the acquirer and buy the firm being acquired.
AstraZeneca share price forecast
What next for AZN shares? AstraZenecas investors have recently focused on the firm’s Covid vaccine. However, even when approved, the vaccine will be a small part of the company’s income. Looking at the daily chart, we see that AstraZeneca share price fell to a low of 7,397, which is the lowest level since April.
The shares have already dropped by more than 24% since July this year. It has also moved below the 25-day and 15-day exponential moving averages and below the neckline of the head and shoulders pattern. Therefore, since this pattern is usually bearish, the pair could drop further to at least the support of 7,000p.
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AZN technical chart
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