By Dow Jones
WASHINGTON (Dow Jones) -- Gilead Sciences Inc. said Thursday it
will acquire CV Therapeutics Inc. for $1.4 billion, the latest in a
recent flurry of drug-industry mergers.
Gilead (GILD), based in Foster City, Calif., will pay $20 for
each share of Palo Alto, Calif.-based CV (CVTX) in a tender offer
and second-step merger. The offer represents a 25% premium above
CV's closing price Wednesday of $16.
Shares of CV had nearly doubled in value since the start of 2009
after Astellas Pharma (ALPMY) made an offer of $1 billion, or $16 a
share. CV rejected the bid as too low. The stock jumped 28.5% in
early morning trading on Thursday to $20.55.
Gilead shares were down 4.8% to $41.96. The purchase will dilute
Gilead's earnings in 2009 but start to add to profit by 2010 or
2011, the company said.
A biotech firm with an increasingly broad portfolio, Gilead said
the acquisition would boost its lineup of cardiovascular products.
In CV, Gilead stands to gain a company that makes drugs such as
Ranexa and Lexiscan used to treat heart disease. It's also
researching treatments for diabetes and pulmonary disease.
In 2008, CV posted a net loss of $98.5 million, although sales
rose 86% to $154 million from a year earlier. Highly profitable
Gilead generated $5.3 billion in revenue in 2008.
Gilead's planned purchase of CV follows quickly on the heels of
a deal for Genentech (DNA) Inc., the biotech bellwether that's
agreed to sell out to majority owner Roche of Switzerland.
Already in 2009, Merck & Co. (MRK) has agreed to buy
Schering-Plough (SGP), and Pfizer Inc. (PFE) is acquiring Wyeth
(WYE).
Large companies feel pressure to merge in part because some
highly profitable drugs will lose patent protection in the near
future, exposing them to competition from generic alternatives.
Some analysts also say the industry expects stiffer regulation
under the Obama administration, with industry executives looking to
bulk their companies up as a means to protect their profits.
Smaller biotech companies, meanwhile, are under severe strain as
the global economic slump cuts into sales and their ability to
raise fresh cash to fund new research. Those that lose money have
been urged by investors to find bigger partners.