Medivation Has Different Benefits for Sanofi, AstraZeneca: JPM
Medivation fits Sanofi’s M&A strategy and budget, could help AstraZeneca fill an earnings trough, JPMorgan says in note.
- Says not surprised Medivation has been named as a potential target given Xtandi is differentiated asset
- Based on potential SG&A and tax synergies provided by EU peers, base case valuation range for deal is ~$55-$60/shr, with bull case of $67-$75/shr
- For Sanofi, 8% 2020 EPS accretion possible, but NPV break-even level may be challenging; U.S. Treasury rules may also reduce tax benefit
- Notes Sanofi has M&A budget of ~$20b and wants to bulk up in oncology, inflammation, multiple sclerosis; Medivation could provide pipeline assets in areas where Sanofi wants to expand
- AstraZeneca deal with Medivation could lead to 12% 2020 EPS accretion, may offset near term earnings trough
- Sees overlap in oncology, which could mean potential for cost-cutting
- Says deal would increase debt leverage, which could trigger P/E de-rating; antitrust issue for Lynparza and Medivation’s talozoparib also possible