On his first day as chief executive at AstraZeneca, Pascal Soriot has put an end to the Anglo-Swedish drugmaker’s share repurchase programme, suggesting that the firm’s healthy cash reserves may be used instead for acquisitions.
The company has completed $2.3 billion of share buybacks so far in 2012, out of an initial target of $4.5 billion and the decision to call a halt takes ‘immediate effect’. Mr Soriot, who was chief operating officer of Roche’s pharmaceuticals division before taking over from Simon Lowth, AstraZeneca’s chief financial officer and interim chief executive after David Brennan left in May, said that “as I assume my new responsibilities…I believe this is a prudent step”.
He added that stopping the buyback “maintains flexibility while the board and I complete the company’s ongoing annual strategy update”. The firm gave no more details, saying it will update the market on the outlook for 2013 in conjunction with its full-year 2012 financial results announcement in January.
Analysts have been pondering what Mr Soriot plans to do with the extra cash. In a research note, financial consultants Merrill Lynch claimed that “while we are not surprised that the buyback has been sacrificed, it has come much quicker than we had anticipated and is clearly designed to give flexibility for bolt-on acquisitions”.
This view is shared by most brokers, though some believe Mr Soriot is simply weighing up his options. AstraZeneca is battling to deal with several recent pipeline setbacks and patent expiries and is regularly linked with several potential acquisitions, most recently a deal to buy Forest Laboratories.
