Foundation Medicine Inc (NASDAQ: FMI) is having an overwhelmingly strong start to the trading session this morning, and for good reason. The company announced that it has entered into a defintiive merger agreement, under which, it will be acquired. Of course, the acquisition comes with a strong premium, leading to excitement among investors and sending the stock rocketing for the sky. Today, we’ll talk about:
- The acquisition news;
- what we’re seeing from FMI as a reuslt;
- and what we’ll be watching for ahead.
FMI Announces Acquisition News
As mentioned above, Foundation Medicine is having an incredibly strong start to the trading session this morning after announcing that it has entered into an agreement to be acquired. In a press release issued earlyt his morning, the company announced that it has entered into a definitive merger agreement with Roche Holding Ltd. Genusscheine (VTX: ROG). Under the terms of the agreemen ROG will acquire all outstanding shares of FMI that it doesn’t already own at a price of $137 per share in an all cash transaction. The total transaction value comes to $2.4 billion on a fully diluted basis and a total value of the company at $5.3 billion on a fully diluted basis. The price of the acquisition represents a 29% premium to the closing price on the 18th of June and a 47% and 68% premium on the stock’s 30-day and 90-day volume weighted average share price on June 18th, respectively.
In the release, the company said that the merger has been unanimously approved by the Board of Directors at Roche as well as a Special Committee of the independent directors of FMI and by its full Board of Directors. In a statement, Daniel O’ Day, CEO at Roche, had the following to offer:
This is important to our personalised healthcare strategy as we believe molecular insights and the broad availability of high quality comprehensive genomic profiling are key enablers for the development of, and access to, new cancer treatments. We will preserve FMI`s autonomy while supporting them in accelerating their progress.
The above statement was followed up by Troy Cox, CEO at FMI. Here’s what he had to offer:
Foundation Medicine and Roche share the philosophy that every cancer patient should have access to personalized care informed by validated molecular information. Joining forces with Roche as an independent operating company allows Foundation Medicine to continue its collaboration with Roche, as well as our biopharma partners, to drive ubiquitous access to CGP testing and innovative data services.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to invest or trade is that the news moves the market. In the case of Foundation Medicine, the news proved to be overwhelmingly positive. After all, what investor doesn’t like to see an acquisition at a strong premium? So, it comes as no surprise to see that the stock is making a run for the top in the market today. Of course, our partners at Trade Ideas were the first to alert us to the gains. Currently (9:46), FMI is trading at $136.80 per share after a gain of $30.35 per share or 28.51% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on FMI. In particular, we’re interested in following the news surrounding the acquisition. While the transaction hass been unanimously approved on both sides of the fence, the transaction is still subject to customary closing conditions. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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