RBC poured cold water: The likelihood of Astrazeneca PLC Sponsored ADR (AZN.US) acquiring Bristol-Myers Squibb Company (BMY.US) is "extremely low," with valuation discrepancies and antitrust issues posing the biggest obstacles.

According to investment bank RBC, the potential acquisition of Bristol-Myers Squibb Company (BMY.US) by Astrazeneca PLC Sponsored ADR (AZN.US) is currently unlikely to occur. RBC analyst Trung Huynh wrote in a research report on Monday, In our view, it may be very difficult for both parties to reach a consensus on valuation, adding, Astrazeneca PLC Sponsored ADR previously indicated that it has a clear path for independent growth with its target of achieving $80 billion by 2030, while shareholders of Bristol-Myers Squibb Company are facing headwinds from the patent cliff. From our perspective, both parties need strong economic and strategic justifications to support this merger. We need to see more substantial progress before believing a transaction is likely to be completed. Prior to the release of this report, media outlets reported on Sunday that Astrazeneca PLC Sponsored ADR and Bristol-Myers Squibb Company had held preliminary discussions regarding a potential merger that would create one of the largest pharmaceutical companies in the world. This deal would expand Astrazeneca PLC Sponsored ADR's market share in the U.S. while creating a pharmaceutical giant with a combined market value of nearly $400 billion. Bristol-Myers Squibb Company's stock price remained essentially flat on Monday, while Astrazeneca PLC Sponsored ADRs stock price plummeted by 9%. According to Huynh's analysis, this merger, which could take 18 months to complete, faces potential issues, including antitrust risks, as there is significant overlap between the two companies in the oncology field. Astrazeneca PLC Sponsored ADR would also inherit the patent cliffs associated with Bristol-Myers Squibb Company drugs, including Eliquis (2026-2028), Opdivo (2028-2031), and Orencia (2028). Huynh wrote in the report, There is significant overlap in oncology (particularly immuno-oncology, IO) between the two companies, which could trigger a thorough antitrust review; we anticipate asset divestitures may occur. The firm has rated Bristol-Myers Squibb Company as in line with the market with a target price of $64. Huynh also expressed curiosity about why Astrazeneca PLC Sponsored ADR, which previously stated that it did not need to pursue large-scale mergers or acquisitions, would consider such a major transaction.