Medivation shares jumped almost 20 percent after Pfizer offered $14 billion, or $81.50 a share, for the company in a deal which will allow the New York-based Pfizer to market prostate cancer medication Xtandi. – AFP file picThe planned purchase of Medivation, with its US$2.2 billion-a-year Xtandi, is the latest in a number of deals by large drugmakers willing to pay top dollar for cancer drugs that are more effective than standard, older treatments. The takeover would further Pfizer CEO Ian Read’s efforts to bolster what he refers to as the innovative side of the company’s business.
Advertisement
“With this acquisition, we are expanding and strengthening our footprint in one of the highest-growth therapeutic areas in the biopharmaceutical industry”, he told analysts on a conference call.
As per the merger deal, a subsidiary of Pfizer will start a cash tender offer to buy all of the outstanding shares of Medivation common stock for $81.50 per share. Pfizer said the transaction should close by the end of the year, and will boost Pfizer’s earnings by 5 cents a share in the first full year. Pfizer will also pick up a promising pipeline of cancer treatments that are now undergoing late-stage clinical evaluation.
“This compelling transaction will deliver significant and immediate value to our stockholders and provides new opportunities for our employees as part of a larger company”, said David Hung, M.D., Medivation’s President and Chief Executive Officer. Analysts anticipate that Medivation will post $1.28 EPS for the current fiscal year.
Medivation’s drugs that are being developed could also complement Pfizer’s efforts to create combination cancer drugs with immunotherapies, which set up the immune system fight cancer. Medivation, though, was able to use the funds gained in the Dimebon deal to help finance development of Xtandi, which won approval later the same year that the Dimebon pact went away.
Pfizer, which began its cancer effort several years ago, has not been wildly successful.
The acquisition was approved by the boards of both companies and is expected to be completed in the third or fourth quarter of this year. Pfizer will split the sales of Xtandi in the United States with Astellas Pharma Inc-the Tokyo-based firm that teamed up with Medivation on the said drug. However, Medivation rebuffed all of Sanofi’s efforts as undervaluing the company and began taking bids from other potential suitors.
Pfizer’s financial advisers were Guggenheim Securities and Centerview Partners, with Ropes & Gray LLP providing legal counsel.
Advertisement
Pfizer Inc. (NYSE: PFE) is reportedly in advanced negotiations to acquire Medivation Inc.in a deal amounting to approximately $14 billion, according to reliable sources.
