What happened
Barely a month after acquiring Translate Bio for its mRNA pipeline, French pharmaceutical giant Sanofi (SNY -0.95%) is at it again with a buyout of Kadmon Holdings (KDMN). Ahead of the opening bell Wednesday morning, Sanofi and Kadmon announced the two companies have agreed to an all-cash merger agreement worth $1.9 billion on a fully diluted basis.
In response to this news, Kadmon's shares jumped by as much as 76% in premarket trading Wednesday morning. This $1.9 billion buyout deal represents a whopping 79% premium relative to where the company's shares closed yesterday.
Image source: Getty Images.
So what
Through this latest bolt-on acquisition, Sanofi will add Kadmon's newly approved Rezurock (belumosudil) to its General Medicines portfolio. Last July, Rezurock was approved by the Food and Drug Administration as a first-in-class treatment for chronic graft-versus-host disease for adult and pediatric patients 12 years and older who have failed at least two prior lines of systemic therapy.
The drug will complement Sanofi's well-established portfolio of transplant medicines, which include the anti-human thymocyte antibody Thymoglobulin and the hematopoietic stem cell mobilizer Mozobil. While sales estimates vary among analysts, Wall Street's current consensus estimate has Rezurock achieving peak sales of $500 million before the end of the decade.
Now what
Per this morning's press release, Sanofi said it expects the transaction to close in the fourth quarter of 2021. As Kadmon's shareholders are receiving a sizable premium compared to where the company's shares have been trading for the past three plus years, there probably won't be much opposition to this deal from the majority of stakeholders.
Overall, Sanofi appears to be getting a fairly safe and reasonable deal by snapping up Kadmon at this price. As such, it might be worthwhile to consider buying the pharma titan's shares in the wake of this latest value-creating acquisition.
