What happened
Shares of Myovant Sciences (MYOV) were skyrocketing 37.9% as of 11:32 a.m. ET on Monday. The huge gain came after the company announced that its board of directors' special committee rejected a proposal from Japanese drugmaker Sumitomo Pharma and its wholly owned subsidiary Sumotivant Biopharma to fully acquire Myovant.
Sumitovant already owns roughly 52% of Myovant's outstanding shares. The proposal put forward by Sumitomo was to buy the rest of the company for $22.75 per share in cash. However, Myovant's board determined that the offer "significantly undervalues" the company.
So what
Investors cheered today's news for one overriding reason: They suspect that Myovant can fetch an even higher price. Myovant hinted at this possibility in the press release announcing the offer, stating that the special committee "remains open to considering any improved proposal that reflects the full and fair value of the company."
The proposed offer from Sumitomo is around 27% higher than Myovant's closing share price on Sept. 30, 2022. It's also roughly 31% above the 60-day volume-weighted average price of Myovant stock as of the end of September.
Now what
Myovant said that its special committee is ready to discuss another proposal from Sumitomo. The current price of the biotech stock is nearly 9% above the price in the Sumitomo proposal. It remains to be seen how much higher (if any) the bidding might go. If an agreement is reached, Myovant's shares would be delisted from the New York Stock Exchange after the transaction is completed.
