3 ETFs For AstraZeneca's $39B Alexion Pharmaceuticals Takeover
The biotechnology space is always fertile territory for mergers and acquisitions, and that theme was on display over the weekend when AstraZeneca (NYSE: AZN) announced a -billion takeover of Alexion Pharmaceuticals (NASDAQ: ALXN).
U.K.-based AstraZeneca, which is one of the prime players in the COVID-19 vaccine race, is valuing Alexion at $175 per share in this year's biggest pharmaceuticals takeover.
“Alexion has established itself as a leader in complement biology, bringing life-changing benefits to patients with rare diseases. This acquisition allows us to enhance our presence in immunology. We look forward to welcoming our new colleagues at Alexion so that we can together build on our combined expertise in immunology and precision medicines to drive innovation that delivers life-changing medicines for more patients,” AstraZeneca CEO Pascal Soriot said in a release.
As of the Dec. 11 close, Alexion had a market value of just over $26 billion, meaning it's a decent-sized player in a variety of exchange traded funds. Here are a few “Alexion ETFs” that could be in for a big day Monday.
Invesco Dynamic Biotechnology & Genome ETF (PBE)
The Invesco Dynamic Biotechnology & Genome ETF (NYSEARCA: PBE) has a 4.55% weight to Alexion as of Dec. 11, putting the fund in the upper tiers of ETFs in terms of weight to Astra's new target. That makes Alexion PBE's eighth-largest holding.
The $250.5-million PBE, which is 15.5 years old, holds 30 stocks with an average market capitalization of $25.23 billion, meaning there are other credible takeover targets in this ETF.
PBE tracks the Dynamic Biotech & Genome Intellidex Index, which is “based on a variety of investment merit criteria, including price momentum, earnings momentum, quality, management action, and value,” according to Invesco.
VanEck Biotech ETF (BBH)
The VanEck Biotech ETF (NASDAQ: BBH) has a 4.71% Alexion weight as of Dec. 11, making the stock the fund's fifth-largest holding. That's decent Alexion exposure among ETFs, but the tails that wag the BBH dog are Amgen (NASDAQ: AMGN) and Moderna (NASDAQ: MRNA), which combine for 24.42% of the fund's weight.
Along with Moderna, BBH has some other coronavirus vaccine exposure, helping the fund to a year-to-date gain of almost 23%. In other words, the Alexion takeover news is just gravy for BBH.
First Trust NYSE Arca Biotechnology Index Fund (FBT)
The First Trust NYSE Arca Biotechnology Index Fund (NYSEARCA: FBT) allocates just over 3% of its weight to Alexion, putting it third by that metric behind the aforementioned PBE and BBH.
FBT is home to 30 stocks. Moving beyond the Alexion news, a case can be made that up to half of FBT holdings are legitimate takeover targets and probably 10%, or slightly more, of the fund's components are realistic buyers.
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