Bristol Myers Squibb's (BMY) reported merger discussions with AstraZeneca (AZN) will unlikely result in a transaction as AstraZeneca's shareholders could broadly oppose the combination, RBC Capital Markets said in a Tuesday note.

According to the note, investors generally viewed the talks as credible following the companies' silence after the media report, but most considered the probability of a deal to be low.

AstraZeneca shareholders questioned the rationale for the transaction and expressed concerns about growth, while several viewed the report as a trial balloon that could ultimately be abandoned, the analysts said.

RBC also said Bristol Myers investors were generally constructive toward a transaction but the support depended ona substantial premium and clear value creation. Investors indicated a 40% to 50% premium could be needed to meet return thresholds, while upcoming data for Milvexian and Cobenfy could strengthen Bristol Myers' standalone position and negotiating leverage.

RBC maintained its sector perform rating and $64 price target on Bristol Myers Squibb.

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