IS GILEAD SCIENCES A BUY AFTER A POSSIBLE ASTRAZENECA PLC MERGER? (dividend investing) ⇅
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Today, I will discuss Gilead and AstraZeneca possible merger and the affects that it may have..
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AstraZeneca approach Gilead Sciences about a possible merger. People familiar with the matter have stated that their advisers have been meet about the matter. However, there has not been any decisions made on how to proceed..
If you are unfamiliar with what these companies do, they are both in the healthcare sector. AstraZeneca is the U.K.’s biggest drug maker and Gilead is the creator of a drug, remdesivir, used for coronavirus patients. Which studies show, has shorten hospital stays. If they did plan on merging, this would become the biggest health care acquisition in history..
When it comes to AstraZeneca’s stock, they have risen around 41% during the past 12 months. Which made it the best performer of western pharmaceutical companies on an index set by Bloomberg. Gilead on the other hand has had a gain of around 19%.
Gilead did go on record, stating that that they have no plans or desires to sell or merger with another pharmaceutical company. They are many focused, however, on its partnership deal strategies acquisitions of smaller companies..
Going back to the coronavirus remdesivir, Gilead has been giving it out for free. Which has caused many investors to worry how they plan on making money from it. There are two problems with this however. On one side, if they charged for it, they will be hit with all they want to do is make money and they are just like everyone else. Unfortunately, there is this idea going around that all the big pharmaceutical companies only care about lining their pocks. This is the way with any company, their main focus is to make money. If they don’t, they won’t be much help to anyone, because they will need to close shop..
You have to think that the cost of making the drug and the R and D amounts other things. Gilead’s CEO did state that they may spend around $1 billion just on this treatment only for this year. That’s not including the following years..
On the other side, if they don’t give it out for free, they are missing out on some good PR. Which could possibly help in the short or long term.
Over the past 8 years or so, the current CEO has turned AstraZeneca turned the company around from a company that had aging drugs to making its biggest transaction in more than a decade with the $6.9 billion dollar purchase of a breast cancer treatment from a Japanese drug maker..
So if they do decide to go through with the merger, what will happen to the shares?.
The way that it works is that the acquiring company offers to buy the other companies shares at a specific price. After that, the acquiring company then issues new shares. If you have shares of either company, and this will depend greatly if they completely merger into a new company or if one of the companies goes away. The shareholder will be issued new shares in the new company or the acquiring company. They may also receive more shares than previously held to make it more beneficial to the shareholder.
Disclaimer: I am not a financial adviser and this is for education and entertainment purposes only, so make sure that you do your own research before investing in anything from the video or in the description.
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