Please ensure Javascript is enabled for purposes of website accessibility

GW Pharmaceuticals Stockholders Approve Acquisition by Jazz Pharmaceuticals

By Eric Volkman - Apr 23, 2021 at 7:20PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Jazz is about to get the top cannabis-derived drug on the market, in addition to a robust pipeline.

A big merger at the intersection of the marijuana and pharmaceutical industries is one step closer to completion. On Friday, shareholders of GW Pharmaceuticals (GWPH) approved its acquisition by a subsidiary of Jazz Pharmaceuticals (JAZZ 0.25%), both companies announced in a joint press release. The approval is one of the final steps required to fuse the pair together.

The deal, which was unexpected by most, was originally announced in February. Jazz agreed to pay $7.6 billion in a cash-and-stock transaction for GW Pharmaceuticals; at the time, that price represented a 50% premium to the latter's stock price the day before the announcement.

Medical professional holding cannabis products.

Image source: Getty Images.

GW Pharmaceuticals the most prominent company currently developing cannabis-based medications. The company's main drug is Epidiolex, a treatment for rare forms of childhood-onset epilepsy, and it has been a success -- its sales rose by 72% in 2020 (it won FDA approval in 2018). The company also has a pipeline of other cannabis-based products in various stages of development.

As such, it doesn't feel like an ideal fit for Jazz, which within only a few years will fall completely off the "patent cliff" with its top drug, narcolepsy treatment Xyrem. So it's good that the company will have an increasingly popular drug in its portfolio with Epidiolex. Complimenting that, GW Pharmaceuticals' pipeline might be just the tip of the iceberg for cannabis-derived medications.

As for the acquisition, the only remaining significant hurdle is the approval of the High Court of Justice of England and Wales, as GW Pharmaceuticals is headquartered in Cambridge, UK. The court has scheduled a hearing on the matter for May 5.

On Friday, neither company reached the 1.1% gain posted by the S&P 500 index. GW Pharmaceuticals rose marginally by 0.2%, while Jazz slipped by 0.5%.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

GW Pharmaceuticals plc Stock Quote
GW Pharmaceuticals plc
Jazz Pharmaceuticals plc Stock Quote
Jazz Pharmaceuticals plc
$160.44 (0.25%) $0.40

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/07/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.