The Scoop
AstraZeneca’s planned $400 billion deal with Bristol Myers Squibb triggered worries at the UK government’s highest levels, prompting outreach that helped contribute to the collapse of the deal, according to people briefed on the deal.
Varun Chandra, the UK’s top business envoy and an adviser to Prime Minister Andy Burnham, called AstraZeneca CEO Sir Pascal Soriot directly to convey that the deal would be a significant problem for His Majesty’s government, the people said. The call was prompted by a Financial Times report, earlier this month, that the two companies were in talks about what would have been one of the largest-ever mergers.
While Chandra didn’t explicitly tell Soriot to kill the deal, the call piled on to opposition from AstraZeneca shareholders that prompted Soriot and AstraZeneca’s board to ultimately walk away from the deal talks, according to another person briefed on the company’s thinking.
The FT report sent shares in AstraZeneca down 9% in London, raising concerns among shareholders that a deal signaled an admission by management that its own organic growth strategy wasn’t good enough. The deal “makes neither strategic nor financial sense,” one portfolio manager and shareholder in both companies told the FT in a parade of public investor backlash trotted out after the deal talks became public.
A spokesperson for AstraZeneca declined to comment. Spokespeople for No. 10 did not immediately respond to a request for comment.
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AstraZeneca and Bristol were aiming to announce a deal by the end of August, according to people familiar with the matter. The Financial Times earlier reported the timing of the deal, and that UK officials — led by Chandra — had established a task force to monitor it. But Chandra’s previously unreported call is an indication of Burnham’s commitment to try and keep British companies in the UK despite there being little the government can formally do to prevent outbound investment.
Chandra, who held the same post under former Prime Minister Keir Starmer, is seen as one of the few people in the Burnham government with real links to business; he previously ran Hakluyt, a business advisory firm with operations in the UK and the US.
British companies have increasingly sought to relist in the US over the last few years, betting that deeper pools of capital can boost their share prices. Earlier this year, AstraZeneca dual-listed its shares in the US as it tries to beef up its revenue and presence in the country.