Today’s market-moving news in the drugmaker sector is that Sumitomo Pharma and a subsidiary have agreed to buy out the remainder of Myovant Sciences (NYSE:MYOV) that they don’t already own. Furthermore, they raised their offer to make this purchase. Investors in MYOV stock seem pleased with this development, as they boosted the share price 9% this morning.
Myovant Sciences is a midsize company that advances medicines for women’s health as well as for prostate cancer in men. So far, Myovant has successfully completed five Phase 3 clinical trials involving hormone-sensitive oncology and women’s health. Consequently, the company has been granted five regulatory approvals in the U.S. and Europe.
It’s no secret that Sumitovant Biopharma, a subsidiary of Sumitomo Pharma, takes a strong interest in Myovant’s assets. Indeed, Sumitovant Biopharma already owned 52% of Myovant Sciences prior to last night’s buyout announcement.
Earlier this month, Sumitovant Biopharma offered to buy the remainder of Myovant for $22.75 per share. However, Myovant rejected that offer.
Acquisition Deal Gives MYOV Stock a Big Boost
So, apparently there was a renegotiation and the parties came to a resolution. Sumitovant Biopharma, in conjunction with Sumitomo Pharma, has agreed to purchase the rest of Myovant’s outstanding shares at $27 apiece. On a fully diluted basis, this represents a total transaction value of $1.7 billion.
It also indicates a total company value of $2.9 billion on a fully diluted basis. It’s evident that Sumitovant Biopharma and Sumitomo Pharma are eager to own Myovant Sciences, as the purchase price is around 50% higher than Myovant’s closing share price on Sept. 30.
Speaking of higher share prices, MYOV stock shot up 9% early this morning as today’s traders absorbed these developments. This appears to be a continuation move, as Myovant shares have been on a tear since the summer.
There are potential scientific implications as well, particularly for medical advancement in women’s health and prostate cancer. All in all, it’s a monumental day for Myovant Sciences, and a pretty good day for the company’s investors too.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.