Catalent (NYSE:CTLT), which manufactures pharmaceutical products, is soaring more than 20% in early trading today. Over the weekend, Bloomberg reported that Danaher (NYSE:DHR) is potentially interested in acquiring the company.
Danaher is a holding company that specializes in acquiring life sciences firms. Shares of DHR stock have climbed about 8% in the last three months.
Here’s what investors should know about Catalent and the potential deal moving forward.
CTLT Stock and the Potential Deal
Reportedly, Danaher has expressed a willingness to pay a “significant premium” for CTLT stock, according to people close to the matter. Shares have jumped 24% so far this year as of the end of trading on Friday, Jan. 3.
However, Bloomberg added in its report that Catalent may not be interested in being acquired. Apparently, the deal is not going to happen very soon. In fact, it may not occur at all.
“As a matter of company policy, Catalent does not comment on market rumors or speculation,” the company told Bloomberg.
A major producer of vaccines during the pandemic, shares of Catalent have tumbled more than 50% since reaching their highest level in September 2021. In the third quarter of 2022, the company’s revenue fell slightly year-over-year (YOY). Meanwhile, its operating income tumbled nearly 60% YOY to $56 million.
For its part, Danaher’s top line climbed 3% YOY last quarter, while its operating income also rose about 3% to $2.3 billion. Danaher has not disclosed a major acquisition since 2021.
A New Wave of Mergers and Acquisitions?
Last quarter, there were two major acquisitions in the biotech sector — Johnson & Johnson (NYSE:JNJ) bought Abiomed while Amgen (NASDAQ:AMGN) agreed to buy Horizon Therapeutics (NASDAQ:HRZN). These two deals indicate that mergers and acquisitions (M&A) activity may be increasing in this sector. This comes after M&A activity dampened in 2022.
Danaher’s reported overture to Catalent provides further evidence to support this hypthesis.
On the date of publication, Larry Ramer did not hold (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.
