One AstraZeneca Investor Questions Logic of Any Gilead Deal

(Bloomberg) -- Although a mega-deal could help AstraZeneca Plc achieve its growth targets and provide cash to fund its pipeline, any merger with Gilead Sciences Inc. would face a number of questions and obstacles.

“There doesn’t seem a clear-cut rationale for AstraZeneca to buy Gilead,” Ketan Patel, a fund manager and AstraZeneca shareholder at Edentree Investment Management in London, wrote in an email Monday. It would be difficult to see a merger get approved, “given the current political climate.”

Patel is one of the first investors in the U.K. pharmaceutical company to comment since Bloomberg reported that it made a preliminary approach to Gilead last month to gauge its interest in a potential merger, according to people familiar with the matter.

Patel, citing the U.K.’s resistance to Pfizer Inc.’s unsuccessful 2014 effort to buy AstraZeneca, said there haven’t been many successful cross-border transactions in the field. Getting bigger would be one way for AstraZeneca to ward off future predators.

“Astra’s CEO made a huge commitment to grow the business when he rebuffed the Pfizer deal, so there may be some motivation to use M&A as a vehicle to meet that goal,” Patel said.

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