AstraZeneca and Gilead discussed the mega fusion of coronavirus, reports Bloomberg


Neither company responded to requests for comment Monday, but if the deal were to take place, it would unite two of the major players in the fight against coronavirus in the largest healthcare case ever recorded.

AstraZeneca has obtained production capacity to manufacture 2 billion doses of a potential vaccine, while the experimental drug redesivir gilead has been approved by the U.S. government to treat patients hospitalized with severe covid-19.

Shares in Astrazeneca (Azn) fell by more than 2% in London, FTSE 100 (UKX) the index rose after Bloomberg reported the UK-based company made a preliminary approach last month to the U.S. firm Gilead (Brown). The two companies have a combined market value of nearly $140 billion.

Bloomberg warned that AstraZeneca had not specified financial terms for a deal. Its report also indicates that Gilead discussed the idea with advisors, but that the companies were not in formal discussions.

Analysts said the rationale for the potential deal was not immediately clear. According to UBS, AstraZeneca and its smaller rival have little in common in terms of products and strategy. Yet Gilead has something AstraZeneca doesn’t have – a lot of money.UBS analysts said AstraZeneca could see Gilead’s cash as a way to finance dividend payments. A merger would also unite the two companies in the fight against coronavirus.

Both companies have performed well over the past year. AstraZeneca’s shares have risen about a third since June 2019, while Gilead’s shares have risen more than 15% over the same period. Gilead shares were up more than 3 percent in U.S. pre-market trading Monday.

Uncertainty caused by the coronavirus pandemic has dampened enthusiasm for mega-mergers. But some analysts see an argument for an increase in transactions in the coming months.

“Central banks now that financing costs are in a hurry, but the economic outlook [mergers and acquisitions] growth path will be tempting for many large companies,” said Jasper Lawler, head of research at London Capital Group.


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