Why ViroPharma Inc. Shares Skyrocketed

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 ViroPharma  (NASDAQ: VPHM  ) soared 25% today after Irish drug giant Shire  (NASDAQ: SHPG  ) agreed to acquire the biotechnology company for $4.2 billion.

So what: The all-cash deal values ViroPharma at $50 per share and represents a 27% premium to its closing price on Friday. Shire is making the move to strengthen its portfolio in the increasingly lucrative rare disease drug segment, and judging by its own stock's small gain today, Mr. Market is pleased with the price it's paying to do it.

Now what: Shire expects the deal to close in the last quarter of 2013 and be immediately accretive to its earnings.

"Shire has conducted a thorough and collaborative due diligence process over the last few months and, following completion of the transaction, the integration process will be focused on delivering value to all stakeholders," Shire CEO Flemming Ornskov said. "This acquisition is expected to create a $2 billion rare disease revenue base and delivers further strong growth prospects."

So while ViroPharma is likely all popped out at this point, Shire's newly bolstered potential might be worth a closer look. 

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