Shares in AstraZeneca PLC (LSE:AZN, NASDAQ:AZN) fell 7% to 11,723p on Monday after news that Britain's biggest drugmaker is in talks to buy its US rival, Bristol-Myers Squibb Co (NYSE:BMY, XETRA:RM, OTC:BMYMP).
A deal would create a pharmaceutical group worth close to $400 billion, ranking fourth in the industry by market value.
The cool reception from London investors reflects the scale of what AZ is contemplating.
The Cambridge-headquartered company is the second-largest listed business in the UK, with a market value of nearly £196 billion.
Bristol Myers Squibb, based in Princeton, New Jersey, and best known for its cancer treatments, is worth $133 billion.
Talks have been held in recent months, according to sources, though there is no certainty a deal will be concluded.
AZ has so far declined to comment.
A takeover would deepen the company's presence in the United States, where it has already committed $50 billion to research and manufacturing by 2030.
It would also mark a striking reversal for Pascal Soriot, the chief executive who fended off a hostile £70 billion approach from Pfizer in 2014 and then rebuilt AstraZeneca's pipeline around cancer immunotherapies, drugs that recruit the body's immune system to attack tumours.
That recovery made AstraZeneca a British corporate success story and Soriot one of the longest-serving bosses in the FTSE 100.
A week ago, he said the company remained confident of hitting its target of $80 billion in annual sales by 2030, up from $59 billion last year.
That was despite the surprise failure of Wainua, one of its leading heart disease drugs in development.
Soriot used the same update to urge Western drugmakers to move at what he called "Chinese speed" to avoid falling behind competitors.
Bristol Myers Squibb has its own momentum, having beaten Wall Street forecasts with second-quarter revenues of $12.97 billion, up 5% excluding currency movements, and raised its outlook for the year.
Its UK research operation is based at Moreton on the Wirral, with a commercial head office in Uxbridge.
