Outlook: Zeneca/Astra

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The Independent Online
ANOTHER DAY, another mega-merger, and a cross-border one at that. Zeneca and Astra make a good fit in product and geographical terms. They are also roughly the same size, which means that a genuine merger is at least possible. But the devil is always in the detail. Who will have the upper hand in management terms?

And can the two cultures and nationalities be blended into a harmonious hole? Pharmacia and Upjohn famously degenerated into a snakepit of factional infighting and inter-Continental warring after they merged. From a shareholder value point of view, this is also a far from perfect deal for Zeneca. As the only UK independent of size left, its share price is buoyed by bid hopes. A no premium merger, whatever the cost-cutting benefits and synergies, may seem a poor substitute for an outright takeover.

Certainly Sir Richard Sykes, chairman of Glaxo Welcome, will be watching events with a keen interest. Zeneca was his partner of choice before Welcome, but the price ran away from him and Welcome was more easily attainable.

There is no doubt, however, that he still harbours designs, even though such a takeover would give him almost total hegemony in the UK pharmaceuticals industry. But would he be prepared to pay the price?