08 September 2017

Gilead to purchase Kite


Gilead has announced a USD 11,900 million tender offer to acquire Kite Pharma as it seeks to diversify its revenue streams. The purchaser has agreed to pay USD 180.00 per share, 29.4 per cent higher than the cancer drug developer’s close of USD 139.10 on 25th August 2017, the last trading day prior to the deal being announced.

The acquisition is Gilead’s largest announced to date, according to Zephyr, the M&A database published by Bureau van Dijk. Kite’s notable shareholders include venture capitalists Pontifax and Alta Partners Management, which contributed to the target’s first capital funding round in 2013.

While the merger between the two Nasdaq-listed companies has been approved by the boards at Gilead and Kite, it remains subject to the go-ahead from the Department of Justice and the Federal Trade Commission. The deal will be financed through a mix of cash, bank debt and or senior unsecured notes and is expected to complete in the fourth quarter of 2017.

Gilead has appointed Bank of America, Lazard and Skadden Arps Slate Meagher & Flom as advisors to the deal, while Centerview Partners, Jefferies, Cowen & Company, Sullivan & Cromwell and Cooley are assisting Kite.

Based in Santa Monica, California, Kite is a developer of therapies designed to boost the immune system’s ability to identify and exterminate tumour cells. Its lead product candidate axicabtagene ciloleucel is currently being reviewed by the US Food and Drug Administration, with the expected action date for approval being 29th November 2017.

Billed as one of the largest biopharmaceutical firms globally, Foster City, California-headquartered Gilead specialises in drugs for severe illnesses, such as the human immunodeficiency virus infection, liver and respiratory diseases, cancer and cardiovascular conditions. It employs about 9,000 people and has operations in countries including China, the UK, the UAE, Australia, Canada and Singapore.

In March this year, Kite announced it would raise USD 356.25 million via a public offer, which accounts for 8.7 per cent of its enlarged capital, for the acquisition of new product candidates and other business expenses.

Making an investment this big is nothing new to Gilead. In 2012, the pharmaceutical maker spent around USD 11,200 million to acquire Pharmasset, an anti-viral and cancer therapies developer. By acquiring Kite, Gilead is hoping to replicate the success it had with Pharmasset, whose Hepatitis C drug became a success globally following the takeover, Bloomberg reported. As shown by Zephyr, Gilead’s other large investments announced in recent years include its USD 2,500 million acquisition of liver disease drug maker Nimbus Apollo.

© Zephyr