10th May 2022 18:12
(Alliance News) - Pfizer Inc's move to acquire migraine therapy maker Biohaven Pharmaceutical Holding Co Ltd could spark a wave of M&A sector activity as drugmakers sit on large piles of cash.
Pfizer will acquire the shares in Connecticut-based Biohaven that it does not already own for USD148.50 each in cash, a 79% premium to the company's USD83.14 closing price on Monday.
The New York-based firm will pay a USD11.6 billion cash consideration for the deal. Back in November, Pfizer had said it acquired a 2.6% stake in Biohaven for USD350 million.
Biohaven shares were 71% higher at USD141.76 each in New York on Tuesday morning, giving it a market capitalisation of USD10.00 billion. Pfizer's stock was up 0.3% at USD48.88.
Under the terms of the deal, Biohaven shareholders, Pfizer included, will also receive 0.5 of a share of New Biohaven, a new publicly traded entity, for each share in the legacy company that they own.
Biohaven is the maker of Nurtec ODT, a dual-acting migraine therapy approved for both acute and episodic treatment.
Drugmakers such as Pfizer, BioNTech and Moderna Inc are getting major windfalls from sales of their Covid-19 vaccines and treatments, leaving the large biotechs with a substantial war chest.
Ailsa Craig, co-manager of London-based investment trust International Biotechnology Trust PLC, commented: "Finally, we're seeing Covid cash put to use on M&A in the sector."
Biohaven is International Biotechnology's seventh-largest holding, representing 4.1% of its net asset value as of March 31.
Craig and co-manager Marek Poszepczynski were optimistic about the prospects of a biotech sector rebound, citing two attractive themes supporting the sector, namely low valuations and a resurgence in M&A activity.
The pair said: "While the biotech sector has suffered a long and historic retraction since its highs of spring 2021, the current valuations in the sector pose a compelling opportunity to tap exciting innovation at highly attractive prices - particularly within smaller players in the space, many of which are trading at a fraction of their valuations a year ago.
"Moreover, it is unlikely the de-rating of the sector will have gone unnoticed by the larger pharmaceutical companies, which may catalyse a pick up in sector M&A. We believe that we are well positioned for this eventuality. The biotech sector's unique growth drivers, namely the steadily ageing global population and unabated scientific innovation, remain largely unaffected by geopolitical events and major economic downturns."
By Arvind Bhunjun; [email protected]
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