Synergy Pharmaceuticals Inc (NASDAQ: SGYP) is having yet another strong day in the market today. Ultimately, the gains seem to be the result of takeover rumors that we reported on earlier in the week. Of course, if a takeover were to happen, it would likely happen at a strong premium, leading to investor excitement. As is almost always the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (10:48), SGYP is trading at $4.34 per share after a gain of $0.07 per share (1.64%) thus far today.
Are The SGYP Takeover Rumors Realistic?
As mentioned above, takeover rumors seem to be the reason for recent gains in Synergy Pharmaceuticals. However, are the rumors realistic? First off, let’s talk about what the rumors say. If you believe the hype, Allergan and Takeda are both interested in taking the company over. The rumor offers no price prediction, and there has been no confirmation, though the rumor first broke a couple days ago.
Nonetheless, I will say that both Allergan and Takeda definitely have something to gain through an acquisition of SGYP. Not only would the acquisition include an already approved product (Trulance), but it would also include a relatively impressive gastrointestinal pipeline. So, is there reasoning? Yes! Both companies could stand to gain from an acquisition.
Would SGYP Sell?
This is a hard question to answer. Of course Synergy Pharmaceuticals would sell if it was a good deal that they thought was in the best interest of their shareholders. However, what would that deal have to look like? Considering the strong pipeline, I would imagine that if they sold the company, it wouldn’t be for anything less than a premium around 15% to 20%.
Can The Prospective Buyers Afford The Acquisition?
Now we have to wonder whether or not the buyers could afford the potential acquisition, as it would be a big chunk of money. Nonetheless, a quick look into both Allergan and Takeda will show you that both of these companies have the money bags to put up. The only question is, will they want to?
At the end of the day, no one can tell you if an acquisition is going to happen. Sure, both of the companies mentioned in the rumor have a bit to gain from an SGYP acquisition, and they can clearly afford it. The question is, whether or not they want to. Nonetheless, with no confirmation from either side, investors are left scratching their heads and wondering if there is any validity to the concept. We’ll continue to follow the story closely and bring the news to you as it breaks!
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