Shares of Bioverativ Inc. (BIVV), a hemophilia drugmaker that was spun off from Biogen (BIIB 2.04%) last year, are up by 62.6% in pre-market trading this morning. The catalyst? The biotech's stock is rising in response to the news that the French biopharma giant Sanofi (SNY -0.81%) has bought the company in all-cash deal valued at approximately $11.6 billion.
This deal represents a noteworthy 64% premium compared to where Bioverativ's shares closed last Friday. Sanofi stock is down by 2.85% in pre-market trading, while Biogen's is up by 1.37% on the back of this news.
Sanofi has been searching for a new cohort of growth products ever since its top-selling diabetes drug, Lantus, went off-patent in 2015. Until now, however, the French drugmaker has been shut out of the dealing-making scene by rival pharma companies. Sanofi, for instance, was outbid for both the cancer specialist Medivation and the pulmonary arterial hypertension company Actelion in the past two years. This deal marks the company's first major acquisition since it purchased Genzyme for $20 billion back in 2011.
Although Sanofi expects this acquisition to be immediately accretive to earnings -- thanks to Bioverativ's two Food and Drug Administration-approved hemophilia drugs Alprolix and Eloctate, the price of this deal is still rather questionable, to put it mildly. Perhaps because of its recent failures on the mergers and acquisitions scene, Sanofi was apparently willing to pay 8.5 times Bioverativ's projected 2018 sales to get this deal done.
To be fair, the price tag does fall in line with other recent buyouts in the industry, but that's still a lot of cash to pay for a quick boost to earnings. Sanofi, after all, may have to wait close to a decade to turn an actual profit on this purchase.