January 23, 2013
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of MAP Pharmaceuticals (NASDAQ: MAPP ) soared 59% today after specialty drug giant Allergan (NYSE: AGN ) agreed to acquire the development stage drug developer for $958 million.
So what: The all-cash deal values MAP at $25 per share and represents a whopping 60% premium to its closing price on Tuesday. Allergan is making the move to increase its presence in the treatment of adult migraines, but judging by its own stock's small drop today, Mr. Market isn't thrilled with the price management is paying to do it.
Now what: Allergan expects the deal to dilute its 2013 EPS by about $0.07 and be accretive to earnings by the second half of 2014. "We plan to capitalize on this depth of expertise in Neurology as we continue the global development of LEVADEX as a potential acute treatment for migraine that is complementary to BOTOX and use MAP's proprietary drug particle and inhalation technologies to generate new pipeline opportunities," said Allergan CEO David Pyott. So while MAP shares are likely all popped out that this point, Allergan's newly bolstered growth prospects might help drive outsized gains over time.
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