AstraZeneca to buy Bristol out of diabetes venture for up to $4.1 billion
By Sarah Young and Ben Hirschler
LONDON (Reuters) - AstraZeneca (AZN.L: Quote) has agreed to buy Bristol-Myers Squibb's (BMY.N: Quote) stake in the companies' diabetes joint venture for up to $4.1 billion in a deal that will help return the group to growth, sending its shares to a new high.
AstraZeneca said on Thursday that it would pay Bristol an initial $2.7 billion plus up to $1.4 billion in additional regulatory and sales-related payments.
The move will bulk up AstraZeneca's thin drug portfolio and give Bristol more funds to invest in other areas, such as cancer, where it is developing promising therapies tapping into the immune system.
Following the announcement shares in AstraZeneca hit an 11-year high in early morning trading before paring earlier gains to trade up 1 percent at 3,595 pence by 0935 GMT.
Speculation that AstraZeneca might look to buy out Bristol was fuelled last month when the U.S.-based company decided to get out of diabetes research.
The decision to quit research and now sell out of the joint venture marks a strategic reversal by Bristol, which only last year bought diabetes specialist Amylin Pharmaceuticals for $5.3 billion and folded its products into the alliance with AstraZeneca.
"Today's announcement reinforces AstraZeneca's long-term commitment to diabetes, a core strategic area for us and an important platform for returning AstraZeneca to growth," Chief Executive Pascal Soriot said in a statement.
Soriot, who took over in October last year, has focused on diabetes as a key area for growth, hoping to tap into rising demand for medicines to deal with an epidemic of the disease, which is closely tied to obesity. Continued...