Photo of Owen Kennnington, Kevin Martin, Jonathan Slade, Carlo Riva, AstraZeneca.
Jonathan Slade
Group Treasurer
AstraZeneca Plc is a holding company, which engages in the research, development and manufacture of pharmaceutical products. The company was founded in 1992 and is headquartered in Cambridge, UK.
Major acquisition drives the AZ treasury team to even greater heights
Preparing the Alexion acquisition
After arranging US$17.5bn of syndicated committed facilities in December 2020, the AstraZeneca (AZ) treasury team of just 19 (small for the size and complexity of a group with over US$37bn turnover) led by Jonathan Slade, Group Treasurer, set about the task of preparing for the Alexion acquisition closing in 2021.
The team had to structure the new finance companies, adding them to debt programmes that previously did not contain a parent guarantee, liaising with the rating agencies which secured an upgrade from BBB+ to A- from S&P, arranging the repayment of US$2.3bn of Alexion debt with a change of control clause as well as undertaking extensive debt investor marketing.
Through USD and EUR bond issuances on consecutive days (the first for the company), US$8bn was raised at very competitive pricing and US$4bn of term loans were drawn under the acquisition facilities. On closing, US$13.3bn of cash had successfully flown through various entities to the Exchange Agent.
More than funding the acquisition and working from home
Not only did the treasury team fund the cash component of the company’s largest acquisition, it also quietly and efficiently upgraded its treasury system (Quantum), implemented a cross-border cash pool between China and the UK, supported the business on its global vaccine efforts (on a not-for-profit basis) and managed the FX risks therein. The team also added four new banks to its relationship group when it extended its core bank revolving credit facilities (RCF) to US$4.9bn. Forecasting processes on AZ’s FX exposures have also been improved over the last couple of years, utilising volume data from their supply network to calculate intercompany FX exposures monthly.
Clearly, the treasury team also continued to support the day-to-day activities and projects of the business and maintained its business as usual (BAU) treasury activities, without any control issues (with a decrease in staff numbers by two versus the aggregate of AZ and Alexion before the acquisition), in what for nine months was a fully work from home environment.
Welcoming the newly acquired team
BAU activities also included welcoming the new Alexion treasury colleagues to the wider treasury team, managing the enlarged group’s FX exposures and cash investments in an aggregated manner and pooling USD cash to/from the main Alexion treasury entity. In its ‘spare time’, the team started a strategic review of the end-to-end cash payment and receipts processes across the group and what structures and technologies should be implemented as part of the group’s move to a SAP S/4HANA environment over the coming years (eg payment-on-behalf-of (POBO), application programming interfaces (APIs), rationalised banking partners etc). As Slade recalls, “Sometimes, the team even slept!”
Keeping the team engaged
The Alexion acquisition was a high profile and strategic transaction that AZ treasury funded at competitive rates and successfully orchestrated the flow of funds at deal closure. Cash flows and foreign exchange positions were managed on an aggregated basis from day one of the acquisition, albeit on two separate systems. The approval of the China/UK cross-border cash pool was a first for the district in China (Wuxi) where AZ’s Chinese company is based and hence required considerable liaison and influencing of the local authorities. Using volume data from its supply network, coupled with unit prices has not only enabled the company to calculate intercompany FX exposures but to also identify various improvement opportunities for its supply colleagues – a true ‘win, win’. The team showed great professionalism and resilience during the year, despite working from home for most of it, like many other corporates.
AstraZeneca today completed the acquisition of Alexion Pharmaceuticals, Inc. (Alexion). The closing of the acquisition marks the company’s entry into medicines for rare diseases and the beginning of a new chapter for AstraZeneca.
AstraZeneca now has an enhanced scientific presence in immunology and, through Alexion’s innovative complement-biology platform and robust pipeline, will continue to pioneer the discovery and development of medicines for patients with rare diseases. Rare diseases represent a significant unmet medical need and becomes a high-growth opportunity for the company.
Pascal Soriot, Chief Executive Officer, said: “Today we welcome our new colleagues from Alexion to AstraZeneca and begin a new chapter that will augment our growth for years to come. Our sustained R&D investment in oncology, cardiovascular and renal, as well as respiratory and immunology, has powered AstraZeneca’s transformation and now we add rare diseases, where fewer approved treatment options exist.”
Marc Dunoyer, incoming Chief Executive Officer, Alexion and Chief Financial Officer, AstraZeneca, said: “I am delighted to be working alongside my new colleagues at Alexion where we will continue to discover, develop, and deliver medicines that change the lives of people suffering from rare diseases. We look forward to also applying Alexion’s complement-biology platform across areas of AstraZeneca’s broader early-stage pipeline and, significantly, to the extraordinary opportunity to extend existing and future rare disease medicines to patients in many countries where AstraZeneca already has a strong presence.”
21st July 2021
“Perhaps this was in part from having our daily ‘10:30 team call’, which ensured we have all stayed connected and supported,” says Slade.
The submission is really about the AZ treasury team, rather than a particular solution. Clearly the company’s activities are supported by their 13 relationship banks, treasury system consultants, external lawyers etc, but these were not central to the achievements by the AZ treasury team.
The AZ treasury team has delivered the following benefits as a result of the projects implemented over the past year:
- Cost savings.
- Headcount savings.
- Process efficiencies.
- Increased automation.
- Risk mitigated.
- Manual intervention reduced.
- Increased system connectivity.
- Future proof solution.
- Exceptional implementation (budget/time).
The team’s efforts have enabled the business to undertake a strategic acquisition (US$40bn), make significant progress on the integration of the treasury team and activities and receive a credit rating upgrade.
“The ability of the team to not only undertake the current ‘business as usual’ activities, but also support the liquidity and FX risk management of the supply of COVID-19 vaccines, fund the group’s largest acquisition to date and integrate the new treasury processes and team from day one as well as embark on the future strategy of cash within the group, was no mean feat. Recognition by Treasury Today Adam Smith Awards for the entire team’s behaviours and contribution to these achievements would be a fitting way to mark these successes. It would encapsulate both what teamwork is and collectively what the team delivered.” A fitting tribute by Slade to his team; our most deserving Top Treasury Team 2022.
