Myovant Sciences (NYSE:MYOV) stock is skyrocketing over 30% today on news that the British biopharmaceutical company has received a buyout offer.
MYOV stock surged as much as 31% in premarket trading after confirming media reports that it has rejected an offer from its largest shareholder, privately held Sumitovant Biopharma, to buy the shares it doesn’t already own for $22.75 each.
Prior to today, MYOV stock had been up 10% this year and trading at $17.96 per share.
What Happened
In a press release, Myovant Sciences said that the offer it received from Sumitovant Biopharma significantly undervalues the company. Myovant added that its Board of Directors formed a special committee to evaluate and consider the offer and, after careful review, determined “that it is not in the best interests of the company or its minority shareholders.”
Sumitovant Biopharma currently has a 52% stake in Myovant. Its offer of $22.75 per share in cash represented a 27% premium over the stock’s closing price at the end of last week (Sept. 30). The total value of the offer from Sumitovant Biopharma was $2.4 billion.
Why It Matters
That Myovant Sciences has rejected the initial offer raises the prospects that Sumitovant Biopharma will offer more money to buy the shares outstanding that it doesn’t currently own. Investors could make even more money on their holdings of MYOV stock through a sweetened offer.
Indeed, Myovant’s Special Committee said it remains open to considering any improved proposal that reflects the full and fair value of the company and is otherwise in the best interests of shareholders. The committee added that it is willing to engage further with Sumitomo regarding any future share purchase proposals.
Based in the United Kingdom, Myovant Sciences focuses on prostate cancer treatments for men and infertility in women. The median price target on the stock among the five professional analysts who cover the company is currently $21.50 a share.
What’s Next for MYOV Stock
MYOV stock is getting a big price bump today on hopes that Sumitovant Biopharma will offer more money to acquire the company’s shares that it doesn’t already own. However, until that actually happens, the company’s shares are trading on speculation and investors should be careful.
On the date of publication, Joel Baglole 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.
