https://finance.yahoo.com/news/gilead-buy-kite-pharma-11-104…
Stock up $22
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Gilead to buy Kite Pharma for about $12 billion
7:16am ET, 08/28/2017 - Reuters
Aug 28 (Reuters) - Gilead Sciences Inc has agreed to buy immunotherapy developer Kite Pharma Inc in an all-cash deal valued at $11.9 billion, the companies said on Monday. Gilead will pay $180 per share, representing a 29.4% premium over Kite’s Friday close.
Gilead’s growth has been fueled by its pricey but revolutionary hepatitis C drugs but with fewer eligible patients and rising competition, sales have begun to fall. Wall Street and Gilead shareholders have long been expecting the company to use its cash pile for a big-ticket acquisition to reinvigorate its sales growth. The deal, which has been approved by the boards of both companies, is expected to close in the fourth quarter of 2017.
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Gilead’s growth has been fueled by its pricey but revolutionary hepatitis C drugs but with fewer eligible patients and rising competition, sales have begun to fall. Wall Street and Gilead shareholders have long been expecting the company to use its cash pile for a big-ticket acquisition
The majority of GILD’s hepC sales have come from the US meaning that GILD had a ton of cash in the US…not needing repatriation to buy KITE (as US-based company). Other US based biopharma companies have loots of their cash overseas. If the Trump tax plan gets enacted, we will probably see a lot more acquisitions of smaller biotechnology companies.
Chris
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At $180 per share that will almost quadruple the initial price of $47.50 that I was able to buy Kite at, after bulwinkl’s introduction of the company to the board! And it was just earlier this same year! THREE CHEERS FOR BULWINKL!!! Wow, the great things that happen on this board, thanks to all of you!
Saul
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Hip Hip Hoo Ray X 3 for BULWINKL!!!
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Hip Hip Hoo Ray X 3 for BULWINKL!!!
Whoop! I made a measle 200% with options in a month.
Bulwinkl must be up 2-3000% on his calls bought some time ago.
JT
(don’t mean to awaken the get rich quick greed here)
Hey, enjoy your gains!!!
After 40 plus years of stock investing, I’ve learned to celebrate the victories.
Champagne anyone?
Jim
We should send a case to BULWINKL
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Congratulations KITEers!
Denny Schlesinger
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So this article (https://seekingalpha.com/article/4102263-gilead-drops-acquis…) includes the following:
“If the deal closes in November, owners of Kite Pharma would see a total return of 0.6% over the next three months, which is equal to 2.5% on an annualized basis – it thus seems reasonable for Kite’s owners to sell at the current price, I believe, unless they want to speculate on an even higher takeover offer by another company.”
I’m taking they mean “at the current price” being $180? Because I’m not selling at the $139 close. 
This is my first takeover stock. I assume I ride this out until the deal closes (assuming, of course, that the speculated higher offer doesn’t materialize)?
Congrats to all KITE holders and thanks for sharing the wealth on my BLUE shares…that was very kind of you 
KITE taken out for $11 Billion and BLUE sitting at $4.9 Billion…maybe this technology will have further interest from other suitors as a result…we shall see.
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This is my first takeover stock. I assume I ride this out until the deal closes (assuming, of course, that the speculated higher offer doesn’t materialize)?
The price can go up or down, up on a competing bid, down on the deal unravelling. I usually sell early because there is usually not much upside left (2.5% on an annualized basis) and there is the risk of the deal unravelling and the price dropping as happened to me in 2007 with sallie mae (SLM)
http://invest.kleinnet.com/bmw1/stats16.prev/SLM.html
Wall Street wisdom: “Bulls make money, bears make money, pigs get slaughtered.”
Denny Schlesinger
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BTW…wonder how AMGN feels about this?
Weren’t they strategic partners with KITE?
Congrats Saul!
The thing with biotechs is you have a few successful ones, like I DNDN, ELN, and VRTX, all it takes is one bad one to wipe it all away. You get a little cocky and loose patience. In the end the best ones come back again. to get in and out on Kite with a buy out triple, that is the way to fly! No need to worry about the FDA letter, or if the drug can be commercialized.
There are some new Car T drug stocks coming up the pike, maybe worth a gander at some point in time.
But one Kite beats a SHOP and a NVDA in hand.
Does make for an interesting portfolio decision though. Given the higher risk, there is only so much of Kite one can hold in their port, but one can hold a much higher percentage of a SHOP or NVDA as they are clearly less risky and more tangible.
Does 300% on a smaller position equate to 150% on a larger position. Mathematically one can figure this out, but that has always been my issue. I don’t like putting in so much work on a company like Kite and then only being able to hold a small portion in the port.
Seems you’ve had it going both ways this year! Kudos!
Tinker
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Seems you’ve had it going both ways this year! Kudos!
Thanks Tinker!
Saul
Saul et al,
Congrats! This worked out quite well for all of you.
Interesting how this has worked out thusfar, particularly since I’m a GILD shareholder!
Cheers on your win.
Usually, on news like today, I would sell out and take the money and run. This time I’m going to wait and see if someone else with deep pockets will come along.
Any thoughts on practical steps to handle this as an investor focused on high growth?
My own first thought is what has been suggested already: Sell and move on. Unless a higher bid comes in the price is likely to hover at $180 until the buyout is either completed (in which case I have either cash or shares in GILD) or abandoned (in which case the price falls).
The only hope for a higher price short term seems to be if another company comes in with a higher bid, but that sounds a little bit unlikely to me as both companies are agreeing to this deal already.
Seems the best choice is to move my money elsewhere. But … Am I missing anything on why I might want to stay invested?
While the short term win is nice … mine is good, but not as spectacular as some since it took me a while to buy in … I am actually disappointed since I think the longer term potential separately was greater. In that vein I actually hope the deal does fall apart since, even that means a short term loss from current levels, I think long term it would mean more.
I just sold all my KITE positions (held in 3 portfolios). I remember an old adage about birds in the hand versus in the bush.
Yeah, they might get a better offer, but I’m not sure how that would be handled in that both boards have already agreed to the sale. IMHO, there’s a lot more opportunity for the sale to unravel than for a better offer to show up.
Also, one thing that always troubled me about KITE is that this treatment is not like putting a pill on the market. It’s all new technology and a complex procedure. I was always concerned that even with full FDA approval they will have a slow sales ramp, limited by how many procedures they can actually process and how fast they can train medical professionals to administer them. Yes, the TAM is large, and yes they are exploring expanding to other cancers, but no matter what, my perception is that revenue growth will be slow.
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I just sold all my KITE positions (held in 3 portfolios).
I sold all mine too, of course, and got about $179. Why take the chance of holding for a couple of months for $1 more, which is just about half a percent. It was a great run, but when we started out, I never thought we’d almost get a quadruple in seven months or so, never dreamt it!
Saul
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