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What: Shares of U.S. drug maker Cephalon
So what: The all-cash offer values Cephalon at $73 per share and represents a 25% premium to its closing price Tuesday. Valeant is making the move to expand its offering into cancer drugs and other fields, and judging from the stock's 11% pop, Mr. Market seems to agree wholeheartedly with the strategy.
Now what: Cephalon shares have soared past the $73 offer price today, so it's obvious that shareholders expect a higher bid coming. Of course, with Valeant CEO Michael Pearson making it very clear that he will "remain very disciplined on price," I'd consider scaling back any position in Cephalon. Given the risk that Valeant ends up walking away from the deal altogether, locking in some gains just seems like the prudent thing to do.
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