Shares of both Neos Therapeutics (NASDAQ:NEOS) and Aytu BioScience (NASDAQ:AYTU) are up in pre-market trading ahead of today’s shareholder vote on the merger of the two firms. NEOS stock was up as much as 25%, while AYTU stock jumped 15%.
Approval is likely after two proxy advisory firms, Glass Lewis and Institutional Shareholder Services, both recommended NEOS stock holders vote for the tie-up.
Glass Lewis told shareholders that the combination would create a “company with a stronger financial profile and balance sheet than Neos on a stand-alone basis. Broadly speaking, we see no cause for significant concern with the strategic rationale for the proposed transaction and expect shareholders of both companies could benefit from the combination.”
The combined company will continue to be led by Aytu BioScience CEO Josh Disbrow with Neos CEO Jerry McLaughlin joining the company’s board of directors.
No Cash, Just Exchange of NEOS Stock for AYTU Stock
The all-stock deal has Neos shareholders receiving 0.1088 shares of AYTU stock for each share of NEOS stock that they own.
Aytu BioScience is a commercial-stage specialty pharmaceutical company that currently markets a portfolio of prescription products addressing large primary care and pediatric markets. Neos is also a commercial-stage pharma firm. However, it develops and manufactures central nervous system (CNS)-focused products.
The December deal announcement highlighted that the combined entity will have an increased footprint in the prescription pediatric market, an established, growing multi-brand ADHD portfolio addressing the $8.5 billion ADHD market and significant combined revenue scale.
The merger is getting done just as President Joe Biden and global regulators are turning up scrutiny of such deals.
Biopharma Dive earlier this week reported that the U.S. Federal Trade Commission will join European, British and Canadian regulators, along with the U.S. Justice Department and states attorneys general, to update how they review pharmaceutical acquisitions. Regulators are concerned that the high volume of these mergers is increasing drug prices and other anti-competitive issues.
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, following fintech, agtech and property tech startups.