US biotech major Gilead Sciences (Nasdaq: GILD) pleased the market this morning, announcing before trading started that it had found a target for its huge cash pile, that investors have been urging the company to spend against a background of declining sales of its massive hepatitis C franchise.
Gilead said it has reached a definitive agreement to acquire fellow US biotech Kite Pharma (Nasdaq: KITE) for $180 per share in cash, a 29.4% premium to its closing price last Friday. The transaction, which values Kite at around $11.9 billion, was unanimously approved by both the Gilead and Kite boards of directors and is anticipated to close in the fourth quarter of 2017. The transaction will provide opportunities for diversification of revenues, and is expected to be neutral to earnings by year three and accretive thereafter.
Kite's shares were halted in premarket trading on Monday, while Gilead's shares were up as much as 2.7%. When trading resumed, Kite rocketed 28.9% to $179.30. Kite, whose shares have jumped by 210% just this year, is one of the leading players in the emerging field of chimeric antigen receptor T-cell (CAR-T) therapy, which harnesses the body's own immune cells to recognize and attack malignant cells.
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