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Why Pandion Therapeutics Stock Blasted Sky-High on Thursday

By Eric Volkman - Updated Feb 25, 2021 at 6:17PM

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You'd vault into the air too if a big-name pharmaceutical paid a high premium for your stock.

What happened

Pandion Therapeutics (PAND) was a standout on a terrible stock market day Thursday, closing 133% higher (yes, you read that right). This happened because a well-capitalized peer wants to buy out the company.

So what

Pandion, a clinical-stage biotech that targets autoimmune and inflammatory ailments, is being bought out by global pharmaceutical giant Merck (MRK 1.58%). The deal's total equity value is roughly $1.85 billion; under the terms of the agreement between the two companies, Merck will pay $60 per share in cash for the acquisition, which is more than double Pandion's closing stock price on Wednesday.

Gloved hand holding a beaker full of money.

Image source: Getty Images.

Merck will formally launch a tender offer for Pandion's shares. In the likely case that it succeeds in buying a majority of the company, it will fold Pandion into its sprawling operations. It's hard to imagine that Pandion investors won't accept the rich premium Merck is offering.

Assuming Merck reaches its goal, the two companies expect the deal to close by the end of June.

In the press release trumpeting the arrangement, the president of Merck Research Laboratories, Dean Li, was quoted as saying, "This acquisition builds upon Merck's strategy to identify and secure candidates with differentiated and potentially foundational characteristics."

Now what

Since Pandion operates in the hot field of autoimmune disease research, it's little wonder that it attracted the attention of a big peer eager to expand its reach in same. This is a sensible buy for Merck, and will provide quite a windfall for Pandion shareholders.

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