Pernix Therapeutics Holdings Inc (NASDAQ: PTX) is having a horrible day in the market today, and for good reason. The company announced that it has entered into an asset purchase agreement and filed Chapter 11 bankruptcy. Unfortunately, the news upset investors, sending the stock tumbling down. Today, we’ll talk about:
- The bankruptcy;
- what we’re seeing from PTX stock as a result; and
- what we’ll be watching for ahead.
PTX Falls Apart On Takeover And Bankruptcy News
As mentioned above, Pernix Therapeutics Holdings is having an incredibly rough day in the market today after announcing that it has entered into an asset purchase agreement and begun bankruptcy proceedings.
In a press release issued this morning, the company said that the agreement was entered into with certain funds managed by Highbridge Capital Management. Ultimately, the agreement is a stalking horse bid to acquire all of the company assets and subsidiaries.
The bid includes the rights to all branded and generic products and comes with a price tag of just $75.6 million. The $75.6 million would be paid in the form of cash and credit.
Of course, as a stalking horse bid, the only way that the deal is going to go through is that PTX holds a court governed competitive auction. Meaning that the company will actively seek better offers.
In order to facility the stalking horse bid, the company entered into voluntary proceedings under Chapter 11 of the United States Bankruptcy Code. The Chapter 11 will facilitate the restructuring and sale process.
Of course, the company intends to continue business as usual until such transaction takes place. In a statement, John Sedor, CEO at PTX, had the following to offer:
We believe that pursuing this restructuring and sale process is in the best interest of the Company and our stakeholders. It allows us to ensure that patients continue to have uninterrupted access to our life-changing medications and patient support services while also allowing Pernix to address its financial position.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to work in the market is that it’s important to follow the news closely. After all, it’s the news that moves the market. When it comes to Pernix Therapeutics, the news proved to be overwhelmingly negative. Unfortunately, the company has found itself in a position that it’s better to accept an undercut offer than try to continue as it stands. Of course, this is upsetting news to investors.
So, it’s not surprising to see that investors are pushing the stock down in the market today. As is just about always the case, our partners at Trade Ideas were the first to alert us to the declines. Currently (11:52), PTX is trading at $0.41 per share after a loss of $0.73 per share or 64.11% 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 PTX In particular, we’re interested in following the story surrounding the company’s continued work to bring value to investors through the competitive auction process as the current offer is nothing short of disappointing. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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