Medivation Inc (NASDAQ: MDVN)
Medivation is having an incredible day in the market today, and for good reason. It was announced early this morning that Sanofi (SNY) has made an unsolicited offer to acquire the company with one heck of a premium. Let’s face it, few things get investors more excited than the prospect of an acquisition. Today, we’ll talk about the offer that was made, how the market reacted to the news, and what we can expect to see from MDVN moving forward. So, let’s get right to it…
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SNY Makes A Bid To Takeover MDVN
As mentioned above, Medivation is having a strong day in the market today after an announcement that Sanofi has made a bid to acquire the company. According to the announcement, SNY has offered MDVN $9.3 billion in an all-cash deal to acquire the company. At this price, MDVN would be valued at $52.50 per share, representing a 50% premium over the company’s two-month volume-weighted average price prior to the rumors. According to Sanofi, Medivation’s work in oncology plays a key role in its strategic roadmap for 2020, which is why the company made such an appealing offer. In a letter, Olivier Brandicourt, Sanofi CEO, had the following to offer with regard to the story:
“As we aim to further develop our capabilities in this important area, we believe that Medivation represents a very strong fit and, together with our own clinical pipeline and existing infrastructure, will play an important role in our long-term strategy in oncology…”
How The Market Reacted To The News
As investors, we know that the news moves the market. Any time positive news is released with regard to a publicly traded company, we can expect to see gains in the market as a result. Adversely, negative news will generally lead to declines. Not to mention, few announcements get investors quite as excited as an announcement of a possible acquisition. So naturally, we’re seeing strong movement on MDVN today. Currently (11:06), the stock is trading at $56.50 per share after a gain of $4.45 per share or 8.55% thus far today.
Will An Acquisition Actually Happen?
I’ve seen this time and time again – one company will make another an unsolicited takeover offer. As a result, the stock that is the target of the offer will climb. However, in most cases, the offer is not accepted. In this particular case, the offer to acquire MDVN was completely unsolicited and unexpected. While the offer represents a relatively strong premium over the 2-month average price, the offer is actually below the current price on the stock. So, I don’t think that this offer will be taken. Now, it may open the door to discussion with MDVN about a fair-market valuation, but in this case, I don’t think the company will sell quite yet.
What We Can Expect To See Moving Forward
Moving forward, I have an overwhelmingly bullish opinion of what we can expect to see from Medivation. However, the takeover offer has nothing to do with this opinion. The truth is that MDVN has an incredibly strong position in the oncology space, and even if a takeover doesn’t happen, this will likely lead to strong long-run gains. All in all, things seem to be looking great for MDVN in both the short- and long-term outlooks.
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What Do You Think?
Where do you think MDVN is headed moving forward and why? Let us know your opinion in the comments below!
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