J&J buys Cougar for 18% premium... Up about 50% since the first of the year when it was trading at about 4X cash. The cash pile dwindled and the stock price climbed til today it was about 8.5X cash. Since cash would run out in mid-2010, I assumed that there would be a good buying opportunity ahead. Oh well!
graham
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reuters.com
* J&J to pay $43 per share
* Deal to close in third quarter (Adds company comments, background, stock price, byline)
By Deena Beasley
LOS ANGELES, May 21 (Reuters) - Drugmaker Johnson & Johnson (JNJ.N) on Thursday said it has agreed to acquire cancer drug developer Cougar Biotechnology Inc (CGRB.O) for about $970 million in cash in order to strengthen its oncology business.
J&J said it will tender to purchase all outstanding shares of Cougar at $43 per share, which is about a 16 percent premium to their Nasdaq close of $36.98. The shares were trading at $42 after hours.
Cougar is currently conducting two pivotal-stage trials for abiraterone acetate, an experimental treatment for prostate cancer.
"The acquisition of Cougar Biotechnology with its talented team will strengthen our growing capabilities toward a leadership position in the global oncology market," William Hait, head of oncology at J&J's Ortho Biotech unit, said in a statement.
The deal marks the latest in a string of purchases by big pharmaceutical companies of smaller companies with promising products, including GlaxoSmithKline PLC's (GSK.L) agreement last month to acquire Stiefel Laboratories Inc, a privately held maker of drugs for acne and other skin treatments.
The global financial meltdown and consequent withering of financing options has forced many development-stage biotechnology companies to look for mergers or partnerships as a way to weather the downturn.
Much larger recent deals in the space include Pfizer Inc's (PFE.N) $68 billion purchase of Wyeth (WYE.N), Merck & Co's (MRK.N) $41 billion acquisition of Schering-Plough Corp (SGP.N) and Roche Holding AG's (ROG.VX) $47 billion payment for the part of Genentech Inc that it didn't already own.
In addition to its prostate cancer compound, for which key data will be presented at next week's meeting of the American Society of Clinical Oncology, Cougar is developing treatments for breast cancer and multiple myeloma.
J&J said the transaction, expected to close in the third quarter, will reduce its earnings per share by 2 cents to 3 cents. |
