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Item 1 of 3 Test tubes are seen in front of a displayed AstraZeneca logo in this illustration taken, May 21, 2021. REUTERS/Dado Ruvic/Illustration/File Photo
[1/3] Test tubes are seen in front of a displayed AstraZeneca logo in this illustration taken, May 21, 2021. REUTERS/Dado Ruvic/Illustration/File Photo Purchase Licensing Rights, opens new tab
Aug 3 (Reuters) - AstraZeneca (AZN.L), opens new tab shares tumbled 7% in early trading on Monday following reports of talks between the European pharmaceutical giant and U.S.-based Bristol Myers Squibb (BMY.N), opens new tab, baffling investors and analysts.
A person familiar with the matter told Reuters that the two held preliminary talks about a possible combination, potentially creating one of the world's biggest pharmaceutical companies with a combined value of nearly $400 billion, confirming an earlier report by the Financial Times.
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Investors and analysts questioned the strategic logic of the possible tie-up, saying Britain's biggest drugmaker had little obvious need for a transformative acquisition despite potential financial benefits.
"A combination with Bristol does not make strategic or financial sense," said Markus Manns, portfolio manager at Union Investment, an AstraZeneca shareholder. "Many past mega-mergers have destroyed value and there is no apparent need for Astra to do it."
As of Friday, AstraZeneca had a market capitalization of $264.11 billion while Bristol Myers was valued at $133.41 billion.
Reporting by Maggie Fick in London, Prerna Bedi in Bengaluru; Writing by Pushkala Aripaka; Editing by Nivedita Bhattacharjee and Janane Venkatraman
Our Standards: The Thomson Reuters Trust Principles., opens new tab
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