AstraZeneca planning spinoff of China business - report

AstraZeneca has reportedly drawn up plans to break out its China business and list it separately in Hong Kong as a way to shelter the company against mounting geopolitical tensions.

According to the Financial Times, which cited three people familiar with the talks, the Anglo-Swedish drugmaker began discussing the idea with bankers several months ago and is among a growing number of multinational companies now considering that option.

A separation might not ultimately take place, the same people cautioned. One of the sources told the FT that listing the entity in Shanghai was also possible.

It was understood that under the plans, AstraZeneca would carve off its operations in China into a separate legal entity but would retain control of the business. The idea has been "on the table for a few years", one adviser to AstraZeneca told the FT, adding that it had been sidelined until recently amid a global downturn in biotech stocks.

"Every multinational with a strong China business" seems to have considered a similar move, one senior Asia-based banker said. "Even if it’s just the option to give you flexibility in the future, it’s worth thinking about."

A person briefed on AstraZeneca’s plans said listing a separated unit in either Hong Kong or Shanghai could insulate it politically from any moves by China to crack down on foreign companies by making it a more plausibly domestic Chinese business. It would also offer a separate source of capital.

They said the separate listing could also help investors in the remaining company reassure themselves that they had less exposure to China-related risk.