The Biggest Pharma Merger Ever?
In a sector known for mega mergers, there’s a mother-merger brewing. Gilead Sciences and AstraZeneca are two drug-making high rollers that some think will form a massive US-UK pharma alliance in the coming days, but this is still just a rumor.
There’s been a secret offer made, according to people familiar with the matter, and it’s big. It must be somewhere around $100 billion; no chance of the combined business being bought out again. It could even be a bigger deal than Pfizer’s failed $117 billion bid for AstraZeneca in 2014.
How instrumental is coronavirus here? Very. Gilead and AstraZeneca have in common that they are both coronavirus winners. Gilead’s antiviral, remdesivir, strikes AstraZeneca as a leader in the space and the catalyst for an earnings explosion. These companies could also work together in the lucrative oncology niche, formulating new cancer therapies.
We’ve covered mergers and acquisitions in Invstr Academy. Gilead shares will pop in anticipation of something official being announced at the open. The stock will be pegged to AstraZeneca’s offer if one is made, and stick to that level if the offer is accepted, unless it’s renegotiated.
Some investors think Gilead will snub AstraZeneca, though. CEO Daniel O’Day is on the record claiming Gilead wants to focus on itself. The opposing CEO, Pascal Soriot, is lauded and long-term, and to cement his legacy, he might sweeten the deal if Gilead plays hard to get.
It’s then over to regulators to verify the intentions of these companies, and make sure they aren’t forming an alliance too big and bad to be in any way monopolistic… never!
