What happened
There's nothing like a premium-priced acquisition to blast a stock's price higher. That was the dynamic this week with eye-care-focused medicine maker Aerie Pharmaceuticals (AERI). According to data provided by S&P Global Market Intelligence, as of late Thursday Aerie's share price was up a whopping 37% week to date after the company announced it was being acquired by a peer.
So what
Aerie started out the week in style, with itself and owner-to-be Alcon (ALC 1.38%) trumpeting the deal in a joint press release. Alcon is paying $15.25 per share for Aerie, which -- matching the stock's post-announcement rise -- is 37% above its price as of last Friday's market close. All told, the buyout is worth around $770 million in equity value.
For that price, Alcon is obtaining a specialty pharmaceutical company that has two products on the market. Both, Rhopressa and Rocklatan, treat pressure to the eye that can result from glaucoma. While neither of the pair is a blockbuster, they do sell; according to Aerie's latest guidance, the drugs should bring in net product revenue of $130 million to $140 million this year.
Alcon also specializes in afflictions of the eye -- in fact it goes as far as to call itself "the global leader in eye care." So the synergies between the two are obvious, and at least initially, the fit seems to be good.
Now what
Alcon and Aerie expect the acquisition to close in the fourth quarter of this year, and anticipate that it will be accretive to Alcon's earnings in 2024. The deal has been approved by the boards of directors of both companies, and remains subject to approval from Aerie's shareholders -- who, given the rich premium, are unlikely to object in great numbers.
