Replies to post #246107 on Avid Bioservices Inc (CDMO)

[north40000]

Your analysis looks even better for those who might have 4-6 x 65k that Joe has in PPHM shares.

My split-adjusted purchase price/basis[June 1996] for present 1000s of GILD shares has been paid by 2 qtrly dividend payments. I could not pass that by with CP having gone to dinner already.

[JamesGMS]

Joe, thanks for your response:

I actually agree with you - PPHM could indeed be acquired - particularly if by GILD - just not for the $86 dollar per share price you suggested yesterday - and certainly not with such a small stock for stock component. But should the offer sweeten significantly as you suggest below - then yes, I believe they would likely have a deal {although of course I'm assuming you intended to say 100% of worldwide rights to Bavi - and not 50%} In fact, there could easily be less cash involved if the stock component were 1:1 as you suggest.

I expect CASH and STOCK for ALL of PPHM. But, OK James, let's replay your numbers:

CEO John Martin of GILD says, "OK, let's move." He offers $20 Billion for 50% {100%} of worldwide rights to Bavi plus a 1:1 stock exchange. (The float for GILD is 1.44 billion shares, so he'll have to offer 300 million shares, i.e. 20% of the company). Unlikely in my estimation, but I like your optimism.

Joe Six-Pack is going to pass out when this hits his portfolio: He'll get $66 per share from the $20 Billion, = $4.3M, plus 65,000 shares of GILD for a value of $6.63M (based on today's GILD pps of $102), plus appreciation of his GILD shares (at $345 pps in 3 years), which gives him $15.79M more, PLUS the annual dividend of $1.72/share for every GILD share (as North40000 stated, likely to increase in the future)

So Joe Six-Pack is looking at $4.3M + $6.63M + $15.79M + dividends = $26.72M for an original investment of 65,000 shares of Bavi. This would clock out at Bavi today at $411/share.

Joe, I like your optimism as well - although a GILD share price of $345 a share in JUST three years post acquisition sounds like it could be a tad aggressive - but then who knows {see below}. GILD did indeed increase its market cap by over five fold in just three years after the Pharmasett acquisition - so maybe you could be right - and Joe Six-Pack will be passing out once again - but quite happily I'm sure :)

Well, King did mention the word "astronomical."

Enjoy the rest of your day.

James

[eb0783]

This proved to be a brutal, extremely costly mistake. Genentech proved to be such an incredible superstar

Sulaco, An apposing view could be that Genetech may not have evolved into anything more than it was originally. Notice how many of the best and brightest jumped shipped as soon as Roche took total control. That happens many times in that industry and Roche knew that which may be why they followed that strategy.

The entire industry is fully aware of the catastrophic error made by Swiss Roche with South San Francisco Genentech (DNA) in 1991.

If I followed my thought-line from above, I would say this is a very big assumption. The Roche strategy may still be popular and logical today. I’m not arguing, just looking at it from another view. I love your posts.