Why Seagen Stock is Soaring Today

What happened

Shares of seagen (NASDAQ: SGEN) are soaring today, up 16.4% as of 11:14 a.m. ET. The big payoff came after Pfizer (NYSE: PFE) announced its intention to buy biotech for about $43 billion.

So what

Pfizer plans to acquire Seagen for $229 in cash per share. This amount reflects a nearly 33% premium to Seagen’s closing price on Friday, March 10, 2023. Rumors had been circulating for several weeks that Pfizer was in talks to acquire the company. The biotech stock didn’t even jump nearly 33% today, indicating that investors were already betting the takeover rumors would materialize.

Investors also seem to think Pfizer is making a wise choice. The big drugmaker’s stock was up 2% at 11:14 a.m. ET, well above the S&P500s move higher. Shareholders don’t seem concerned that Pfizer intends to finance the acquisition largely by taking on $31 billion in new long-term debt.

Seagen is expected to generate approximately $2.2 billion in revenue this year, a 12% year-over-year increase, from its four approved cancer treatments. However, Pfizer believes the drugmaker will generate more than $10 billion in risk-adjusted revenue in 2030. That figure could increase significantly beyond 2030.

Now what

The boards of Pfizer and Seagen have approved the transaction. However, this is not yet done. Seagen shareholders must first vote in favor of the acquisition. Regulators also need to lend a hand. But Pfizer and Seagen don’t foresee any obstacles at this point. They expect the transaction to close in late 2023 or early 2024.

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Keith Speights holds positions at Pfizer. The Motley Fool fills positions and recommends Pfizer and Seagen. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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