What happened
Shares of Seagen (SGEN) are soaring today, up 16.4% as of 11:14 a.m. ET. The big gain came after Pfizer (PFE 2.40%) announced it plans to buy the biotech for around $43 billion.
So what
Pfizer plans to acquire Seagen for $229 in cash per share. This amount reflects a premium of nearly 33% above Seagen's closing price on Friday, March 10, 2023. Rumors had been swirling for several weeks that Pfizer was in discussions to acquire the company. The biotech stock didn't jump even close to 33% today, though, indicating that investors were already betting that the acquisition rumors would pan out.
Investors also seem to think Pfizer is making a smart move. The big drugmaker's stock was up 2% as of 11:14 a.m. ET, well above the S&P 500's move higher. Shareholders don't appear to be concerned that Pfizer intends to fund the acquisition in large part by taking on $31 billion in new long-term debt.
Seagen should generate revenue this year of around $2.2 billion, a 12% year-over-year increase, from its four approved cancer therapies. However, Pfizer thinks the drugmaker will kick in more than $10 billion in risk-adjusted revenue in 2030. That number could grow significantly beyond 2030.
Now what
Both Pfizer's and Seagen's boards of directors have approved the transaction. However, it's not a done deal just yet. Seagen's shareholders must first vote in favor of the acquisition. Regulators must also give a thumbs-up. But Pfizer and Seagen don't anticipate any roadblocks at this point. They expect the transaction will close in late 2023 or early 2024.
