In response to the company accepting a buyout offer, shares of Patheon N.V. (NYSE: PTHN), a provider of development and manufacturing services for the pharmaceutical industry, jumped 33% as of 10:45 a.m. EDT on Monday.
Thermo Fisher Scientific (NYSE:TMO) has agreed to acquire Patheon for $35 a share. That represents a 35% premium over the stock's closing price on Friday. The deal values Patheon at $7.2 billion when including the $2 billion of net debt on the company's balance sheet.
Thermo Fisher's management team said that this deal will give the company an immediate foothold in the $40 billion contract development and manufacturing organization (CDMO) market. In addition, the acquisition is expected to be "immediately and significantly" accretive to its adjusted earnings per share. Current estimates call for the transaction to add $0.30 in adjusted EPS in the first full year after closing.
Thermo Fisher said that it will be funding the deal with $5.2 billion in debt and $2 billion in equity. If the deal wins regulatory approval, it is expected to close before the end of the year.
This looks to be a done deal since two of Patheon's largest shareholders -- JLL Partners and Royal DSM -- have already agreed to tender their shares as part of this transaction. These two owners hold roughly 73% of Patheon shares so they have enough voting power to force the deal to go through.
With Patheon's shares trading within $0.50 of the buyout price, it probably makes sense for shareholders to take a victory lap and hit the sell button. They should then think about reinvesting their proceeds into a few promising stock ideas.