Stellar Biotechnologies Inc (NASDAQ: SBOT) is flying in the market today, and for good reason. The company announced a share exchange agreement, under which it will essentially absorb a privately held biotech company with a lot to offer.
As you could imagine, the news excited investors, sending the stock on a run for the top. Today, we’ll talk about:
- The share exchange agreement;
- what we’re seeing from SBOT stock as a result; and
- what we’ll be watching for ahead.
SBOT Announces Share Exchange Agreement
As mentioned above, Stellar Biotechnologies is having a great day in the market today after the company announced a share exchange agreement. The announcement came via press release just before the opening bell.
In the release, the company said that the share exchange agreement was signed with a privately-held company by the name of Edesa Biotech. The Canadian company will combine with SBOT in order to create a company that’s focused on the development of innovative therapeutics for dermatological and gastrointestinal conditions with clear unmet medical need.
According to the terms of the agreement, Edesa shareholders will exchange their shares for newly-issued shares of SBOT. At the closing, Edesa will become a wholly-owned subsidiary of Stellar Biotechnologies.
The combined company will be owned in majority by Edesa, who will hold 90% of shares. Existing SBOT shareholders will maintain ownership of the remaining 10% of the company, which will have its name changed to Edesa Biotech Inc.
In a statement, Frank R. Oakes, SBIO President and CEO, had the following to offer:
We believe this proposed business combination provides new growth opportunities for Stellar shareholders. We have been impressed with Edesa’s management team and are looking forward to implementing a new vision for the combined company.
This agreement marks another milestone for Edesa and our mission to efficiently develop novel, safe and effective treatments for conditions where patients have limited treatment options available. We believe we are at a significant inflection point in our company’s history and look forward to offering shareholders additional value creation opportunities as we reach milestones in our clinical programs.
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 the news leads to moves. When it comes to Stellar Biotechnologies, the news proved to be overwhelmingly positive.
While shareholders of the company will become minority owners of the combined company, the transaction is a highly accretive one that will increase the value of the company substantially. So, it’s not surprising to see that excited investors are pushing the stock on a run for the top.
As is normally the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (10:04), SBIO is trading at $2.38 per share after a gain of $2.38 per share or 1.18% 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 SBIO. In particular, we’re interested in following the story surrounding the merger of the company and excited to see what the future holds for investors in the combined company. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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