Synageva Biopharma Corp (NASDAQ: GEVA)
Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN)
Synageva Biopharma stock holders had an absolutely amazing day yesterday, with the the stock climbing by more than 100% on the news of an acquisition by Alexion Pharmaceuticals. Today, things seem to be following the same trend as the stock continues to climb. So below, we’ll do a brief recap of the acquisition, talk about why it’s such big news for GEVA shareholders and why ALXN shareholders didn’t seem to like the deal, and discuss what we’re seeing in the market today.
- Total Acquisition Cost – About $8.4 billion.
- Price Per Share – For each share, ALXN will pay $115 cash and 0.651 ALXN shares.
Why GEVA Shareholders Loved The News & ALXN Shareholders Felt Different
The reaction we saw in the market yesterday was incredible. Synageva stock climbed by well over 100% while Alexion’s stock value fell quite a bit. The reaction all boils down to the details of the deal. When this deal was made, the value of Synageva stock was at just over $95 per share. However, this deal values each share at well over $200 per share; giving Synageva Biopharma a more than 100% premium!
Knowing that, it’s easy to see why Synageva shareholders got so excited about the news. In one quick move, GEVA stock went from being worth just over $95 to more than $200. It’s also easy to see why ALXN shares were down yesterday. The bottom line is that it’s their company that is paying such a high valuation on the acquisition; and investors clearly didn’t like the terms.
There’s Good News Today On Both Sides
Today, for GEVA, we seem to be seeing the same thing in the market; it’s all upward movement today. For ALXN, good things seem to be happening as well. Here’s what we’ve seen so far…
- Synageva – Currently (12:12) trading at $212.06 per share after a gain of 4.26% so far today.
- Alexion – Currently (12:12) trading at $161.60 per share after a gain of 4.25% so far today.
What To Expect Moving Forward
All in all, I would have liked to have seen pricing a bit more fair on this offer, but I can also understand how important the acquisition is to Alexion. These are companies that will grow together to produce something different, not just something big. In the long run, I’m expecting to see big gains!
What Do You Think?
What are your thoughts on the acquisition? We’d love to see your opinion in the comments below!