Shares in AstraZeneca were down 6.7 per cent in early trading on Monday in the UK, the biggest drop on the FTSE 100 index, as investors and analysts said Britain's biggest drugmaker had little obvious need for a transformative acquisition despite potential financial benefits.
A person familiar with the matter told Reuters that AstraZeneca and Bristol had held talks, confirming an earlier Financial Times report.
On Friday, the two had a combined market capitalisation of nearly $US400 billion ($A569 billion), with AstraZeneca valued at $US264.11 billion and Bristol Myers at $US133.41 billion.
"A combination with Bristol does not make strategic or financial sense," said Markus Manns, portfolio manager at Union Investment, an AstraZeneca shareholder.
"Many past mega-mergers have destroyed value and there is no apparent need for Astra to do it."
While AstraZeneca this year completed a direct listing on the New York Stock Exchange, underscoring its focus on its biggest market and its aim of benefiting from higher US valuations, a Bristol Myers deal would effectively mean a British company buying a major US pharmaceutical champion.
Manns said AstraZeneca CEO Pascal Soriot had, in his 14 years at the helm, consistently prioritised research and development over cost-cutting.
"A merger would deeply disrupt a well-run company with a full pipeline," he said.
Jefferies analysts said in a note they were puzzled by the reports of talks given AstraZeneca had a strong "growth and innovation profile".
"If there is one company that doesn't need financial engineering, it's AstraZeneca," they wrote.
