Pfizer (NYSE: PFE) announced on December 13 that it will take over Arena Pharmaceuticals (NASDAQ: ARNA) for $100 a share.
Arena Pharmaceuticals is developing new immuno-inflammatory treatments for gastroenterology, dermatology, and cardiology.
This is a timely acquisition given the number of athletes mysteriously collapsing on the field from cardiac problems, and the even larger number who are retiring because of heart problems.
There are also rumors of a large number of mysterious cardiac problems and early deaths throughout the western world. For example, pilot deaths rose 20-fold in 2021 over 2020 from 6 to over 120.
While there’s no direct connection between Pfizer’s MRNA jab and these (mainly) heart attacks there do seem to be a lot of deaths following the jab.
Irrespective of any connection (which would be misinformation of course) it’s clear that there’s a new epidemic of the heart and it looks like it will be here to stay.
Moreover, while Arena would probably have a bit of trouble navigating FDA approval for its heart inflammation treatment, Pfizer has demonstrated that it can get just about anything through the FDA.
It’s a perfect match and both companies’ management and board have approved the takeover.
However, it’s not a binding deal and Pfizer could pull out. For the reasons I’ve stated above, I don’t expect they will. They may even help a bit with the FDA approvals prior to takeover.
The takeover price is $100 a share, which is double what the share price was doing earlier this month.
Right now, the shares are trading at $91.23. That’s a relatively steep discount to the takeover price. The reason being is that no date has been announced for the takeover and there’s no binding agreement.
Once the date is announced and the companies sign a binding agreement, I expect the shares to move up closer to the takeover price of $100. Typically this means within 2-3%, or $97 or $98.
However, the January options may expire prior to the announcement, which would be most annoying.
Right now the stock is trading at $91.23. If the stock moves up to our target of $97, then both the $90 and $95 calls will expire in the money for a profit.
The $90 calls are trading at 2.50 and would be worth 7.00 at expiration at our $97 target for a pretty nice 4.50 profit, or 180%.
However, the $95 calls are trading at 0.3 and would be worth a hefty 2.00 for a hefty 1.70 profit, or 567%.
Usually I would prefer the lower risk play here, which would be the $90 calls. However, if doubts arise about the takeover, the stock could fall below $90 and both plays would be losers.
For this reason, I recommend buying the $95 calls expiring on January 21, 2022.
The Yahoo Finance symbol is ARNA220121C00090000.
I recommend buying 100 contracts at 0.30 ($30 per contract; or $3,000 for a 100-contract position). Place a limit order and place it again each day for a week until you get hit.
Then sit back and wait. If things go to plan, this will be worth $20,000 a month from now.
If the share price doesn’t move up by then, we’ll roll the position forward to February or March.
Cheers,
Peter.
Update December 29
You should have been able to open your position at 0.30 as recommended above.
