AstraZeneca investors revolt on pay as mega-mergers near

The pharmaceuticals giant AstraZeneca was rocked by a shareholder rebellion yesterday when almost 40 per cent of its investors failed to back executive pay at the group.

The company, which is a $100bn (£60bn) takeover target for US rival Pfizer, suffered the setback at its annual meeting, where just 60.6 per cent of shareholders approved its remuneration report, which resulted in the chief executive, Pascal Soriot, taking home more than £3.3m in pay and bonuses last year.

The rebellion came after Mr Soriot announced the possible sale or spin-off of non-core businesses in a move that analysts said could be worth up to $15bn. However, he remained tight-lipped about the possibility of Pfizer making a formal bid for AstraZeneca following news of informal discussions late last year. “We have a firm policy on not commenting on things like this and that has not changed,” he said. “We prefer to talk about things we are doing to grow the business.”

Mr Soriot said AstraZeneca was considering options similar to the asset swap between Novartis and GlaxoSmithKline earlier this week, in which the companies exchanged non-core units and formed a joint venture in consumer healthcare. He also highlighted success in new cancer drugs, taken to late-stage clinical trials, including treatments for lung cancer and ovarian cancer. AstraZeneca’s sales in the three months to March were flat at $6.42bn (£5.28bn).

The pharmaceuticals and healthcare sector has been a hive of mergers and acquisitions in recent weeks. This intensified further yesterday when Zimmer Holdings, the US maker of medical devices, agreed to buy rival Biomet in a deal worth $13.4bn (£7.9bn).

Analysts at Bernstein said Zimmer’s deal with Indiana-based Biomet could be a prelude to further consolidation in the medical equipment sector, speculating that British-based hip-joint maker Smith & Nephew could be a target for Johnson and Johnson of the US. Shares in Smith & Nephew, which rejected a £15bn merger with Biomet in 2011, jumped sharply.

The Zimmer-Biomet merger, which would create America’s eighth-largest medical devices company by sales, is expected to close in the first quarter of 2015.

Zimmer said that the tie-up would improve its offering in knee, hip, surgical, spine and dental products and result in $270m of synergies over three years.

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