AstraZeneca holds talks with Bristol Myers Squibb on $400bn merger

Proposed $400bn tie-up with Bristol Myers Squibb would create world’s fourth-largest drugmaker but analysts question rationale

More than £17bn was wiped off the value of Britain’s biggest drugmaker, AstraZeneca , on Monday after a report that it was in discussions to take over its US rival Bristol Myers Squibb in a deal that would create a near $400bn (£300bn) pharmaceutical group.

AstraZeneca, run by Pascal Soriot, its longtime chief executive, had been worth nearly £196bn before the news broke. BMS, headquartered in Princeton, New Jersey, and known for its cancer treatments, was worth $133bn (£98bn).

A tie-up would be one of the biggest ever pharmaceutical deals and would create the world’s fourth largest drugmaker by market value.

AstraZeneca’s FTSE 100-listed shares plunged by 8.9% to close at a low of £115 in London as investors reacted to news of the talks, which were first reported by the Financial Times .

That pushed AstraZeneca’s value down to about £178bn, as it lost the title of the second-biggest listed company in the UK to Shell.

BMS’s shares rose 1.7% after Wall Street opened, before reversing and losing those gains by midday in New York.

While talks have been held in recent months, there is no certainty that a deal will be concluded, according to sources.

A deal would expand AstraZeneca’s presence in the US, where it is already investing $50bn in research and manufacturing by 2030 . It completed a direct listing of its shares on the New York stock exchange in June, and a deal with BMS could revive fears of a shift away from the UK.

The news surprised analysts, who questioned the rationale behind a tie-up and noted that any deal would be closely scrutinised by regulators, given the overlap of the companies’ oncology portfolios.

Analysts at Jefferies, led by Michael Leuchten, said: “‘Why’ is perhaps not yet clear to us: we suspect that most people will focus on the potential to establish an even bigger oncology powerhouse, with the resultant portfolio likely the broadest in the industry. However, beyond the regulatory hurdles we would argue that pipeline assets could be sourced elsewhere, as AstraZeneca has been doing, particularly in China.”

Chris Beauchamp, a chief market analyst at the investment platform IG, said: “Though a rare example of a big UK firm buying a smaller US firm is something to warm the cockles of the British heart, it risks the departure of yet another national champion, and in any case the pair’s large cancer divisions are a major hurdle to a successful deal. BMS has struggled since 2023, and some Astra shareholders will wonder at the need to do expensive M&A when their shares are doing so well.”

Some shareholders were also sceptical. “The only advantage for AstraZeneca in this rumoured combination with BMS seems to be to accelerate its US footprint and sales,” said Lucy Coutts, an investment director at JM Finn, an AstraZeneca shareholder. “On balance, BMS shareholders would be the winners of any combination with AstraZeneca and so this news will undoubtedly be received coolly by AstraZeneca shareholders,” she told Reuters.

A major shareholder told the Guardian: “Bold potential move, but not yet any real detail to get our teeth into.”

Lukas Leu, a portfolio manager at the AstraZeneca shareholder ATG Healthcare Investments, said a deal could boost margins through cost synergies and expand reach in neuroscience and cell therapy, but he questioned how a combined firm would position competing drugs. “I am not a big fan of mega-mergers, it kills innovation and agility,” he said.

AstraZeneca, headquartered in Cambridge, England, was formed in 1999 from the merger of the Swedish company Astra AB and the UK company Zeneca Group. Zeneca had been spun off from Imperial Chemical Industries (ICI) five years earlier.

AstraZeneca’s share price has more than quadrupled during Soriot’s leadership, when it overtook its UK rival GSK in size.

Under Soriot, the company fended off a hostile bid from its US rival Pfizer in 2014 that valued AstraZeneca at almost £70bn. He then successfully rebuilt the company’s drug pipeline with cancer immunotherapies – drugs that harness the body’s immune system to fight tumours – and other treatments.

A week ago, AstraZeneca said it was confident of hitting its growth targets for 2030, by which time it expects to achieve $80bn (£60bn) in annual sales , up from $59bn last year, despite the surprise failure of Wainua, one of its leading heart disease drugs in development. Soriot said the company must move at “Chinese speed” to ensure it did not fall behind competitors.

A few days later, BMS beat Wall Street expectations with its second-quarter results and lifted its 2026 outlook. It made revenues of $12.97bn during the quarter, up 5% on a year earlier, excluding currency movements.

The US company employs about 800 people in the UK. Its UK research team of 250 people is based at Moreton on the Wirral peninsula near Liverpool, while its commercial head office for the UK and Ireland is in Uxbridge, west London.

John Murphy, a senior pharma analyst at Bloomberg Intelligence, said a deal made “limited strategic sense” for AstraZeneca. “Their growth outlooks are very different – double-digit earnings gains are forecast at Astra through 2030, with Bristol set for continued declines, due to multiple patent expiries – and, while both are focused on developing promising pipelines, history suggests such mega-mergers hamper pipeline progress.

“Major cost savings via eradication of overlapping infrastructure is one obvious benefit but would suggest reduced confidence at Astra in its pipeline and growth outlook. A link-up in certain disease categories may be a possible area of future collaboration,” he added.

AstraZeneca declined to comment. BMS was also contacted.