On Friday, July 2nd there was alot of chatter about Sanofi, ticker SNY making an acquisition.
Here is the quote from Marketwatch based on the Bloomberg report: Sanofi’s chief executive has informed the board of directors that the company is in preliminary negotiations to acquire a U.S.-based drug maker for around $20 billion.
This caused three stocks to start moving. Allergan AGN up almost 7% and Genzyme GENZ & Biogen BIIB up almost 6%.
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What confuses me is, Why would they pay such a large premium for GENZ or BIIB? They have a market cap of 14.1 & 13.2 billion respectively after the jump in price on Friday. AGN on the other hand, has a market cap of $19 billion.
I usually do not get excited about take over rumors because they usually remain just a rumor but I think there may be a covered call trade to be had over here.
I am looking at buying the stock and selling either the July $60 Call or the July $65 Call.
My ideal trade would be to buy the July $60 Call if I can get a good fill on it. This gives me the opportunity to make 3% in two weeks. We will see how the stock trades today and if I can get a good fill.
Stay tuned for more at www.optionsweekly.com
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Seems like Goldman Sachs is reading this newsletter!
http://www.streetinsider.com/Analyst+Comments/Goldman+Sachs+Sees+Allergan+%28AGN%29+As+Most+Likely+Takeover+Target%2C+Ups+Price+Target/5799686.html
Allergan, Inc. was founded in 1950 and incorporated in Delaware in 1977. It is a multi-specialty health care company focused on developing and commercializing innovative pharmaceuticals, biologics and medical devices that enable people to live life to its greatest potential. The Company discovers, develops and commercializes specialty pharmaceutical, medical device and over-the-counter products for the ophthalmic, neurological, medical aesthetics, medical dermatology, breast aesthetics, obesity intervention, urological and other specialty markets in more than 100 countries around the world. It is engaged in specialty pharmaceutical, biologic and medical device research and development, with global efforts targeting products and technologies related to eye care, skin care, neuromodulators, medical aesthetics, obesity intervention, urology and neurology. It operates its business on the basis of two reportable segments – specialty pharmaceuticals and medical devices. The specialty pharmaceuticals segment produces a broad range of pharmaceutical products, including: ophthalmic products for chronic dry eye, glaucoma therapy, ocular inflammation, infection, allergy and retinal diseases; Botox for certain therapeutic and aesthetic indications; skin care products for acne, psoriasis, other prescription and over-the-counter skin care products and, beginning in the first quarter of 2009, eyelash growth products; and, beginning in the fourth quarter of 2007 urologics products. The medical devices segment produces a broad range of medical devices, including: breast implants for augmentation, revision and reconstructive surgery; obesity intervention products, including the Lap-Band System and the Orbera Intragastric Balloon System and facial aesthetics products. The Company is subject to federal, state, local and foreign environmental laws and regulations.