British-Swedish Biopharmaceutical Company AstraZenca Plc. (AZN) reached out to U.S based competitor Gilead Sciences (GILD) in regard over a possible merger of the two companies. The news was first reported on Bloomberg News who claimed to have secured the leak from insiders of the companies.
According to the Bloomberg post, AstraZenca contacted Gilead in the previous month however, Gilead turned down the proposal claiming they aren’t interested in merging with a fellow big biotech company in the sector.
Going by their respective current market valuation, in a scenario where the two companies merge then they will be having a combined market value of around $232 billion. This will surpass value of other leaders in the biotech industry including Merck & Co (MRK) and Pfizer (PFE) which have a market valuation of $207 billion and $200 billion respectively.
When contacted to reply on the matter, AstraZeneca via its spokesperson said it does not comment on rumors or speculations. On the other side, Gilead declined to give a comment.
The two companies are on the race to find a vaccine for COVID-19 and any possible merger between them will most definitely grant them an upper hand against their industry peers on the race for coronavirus vaccine.
Jefferies analysts say Gilead may appear cheap with its price-to- earnings ratio being 12 times, on the other hand, AstraZenca maybe be attracted by favorable free cash flows and potential cost trimming.
