Hedge Funds Bet AstraZeneca PLC Will Stay Independent For A Little While Longer

Hedge Funds Bet AstraZeneca Will Stay Independent For A Little While Longer
August 4, 2014
By Krystle Vermes, BioSpace.com Breaking News Staff

AstraZeneca is expected to remain independent as the hedge fund community sees a Pfizer takeover unlikely in the near future.

Pfizer was intent on taking over AstraZeneca in the spring, but was forced to drop its plan in May as a result of the U.K.’s Takeover Code. The company was then banned from entering discussions with AstraZeneca again for three months, according to Bloomberg.

The Takeover Code also requires a six-month cool-off period before the same company can place another bid. Pfizer has not ruled out the option to do so once the time has passed.

This news on hedge fund outlooks comes after U.S. fund Elliott Advisors, started by billionaire Paul Singer, built a large position at AstraZeneca, according to the Telegraph. Elliott Advisors is now thought to be selling out of AstraZeneca as a trading opportunity, which casts an even larger shadow over the pharmaceutical giant.

However, AstraZeneca raised its earnings outlook on July 31, according to the Wall Street Journal. The company had a dip in profit in the second quarter, but sees its earnings for the full year to end on a high note.

"We have made significant progress in the first half of the year, with visible momentum across our cardiovascular, diabetes and respiratory franchises as well as strong growth in the emerging markets,” said Pascal Soriot, Chief Executive Officer of AstraZeneca. “This has driven revenue growth for the second consecutive quarter and achieved a 13 percent increase in Core EPS in the quarter. The pace of execution of our strategy and the underlying performance of our teams give us confidence to raise 2014 guidance for the full year.”

Investors in the company are expected to watch closely for new, experimental cancer drugs that are expected to debut from AstraZeneca in September.

AstraZeneca is thought to have seen consistent sales as a result of Nexium, its heartburn pill. A generic version of the pill was slated to hit the market back in May, but has been pushed back to the fall. As a result, AstraZeneca has still been profiting from the demand for Nexium.

The company stated that overall sales increased 4 percent to $6.4 billion in the second quarter of this year, which surpassed analysts’ predictions. AstraZeneca also saw a rise in sales in emerging markets such as China, where sales rose 22 percent.

Read more recent M&A news here.
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