Kythera Biopharmaceuticals Inc (NASDAQ: KYTH)
Keythera Biopharmaceuticals stock is soaring in the market today following an early morning announcement that the company will be acquired. Today, we’ll discuss who will be acquiring KYTH, the details of the deal, how the stock reacted in the market, and what we can expect to see moving forward. So, let’s get right to it.
KYTH Will Be Acquired By AGN
Allergan, Inc. (NYSE: AGN)
In an early morning announcement today, investors learned that Allergan will be acquiring Kythera Biopharmaceuticals. The deal worked out between the companies is valued at about $2.1 billion; which works out to about $75 per share. According to Thomson Reuters, the equity value of the sale comes to about $1.94 billion. Upon the close of the deal, investors will receive 80% of the total purchase price in cash. The other 20% will be provided to investors in shares of Allergan.
As a result of the acquisition, Allergan is likely to gain quite a bit. The company plans to use Kytheral Biopharmaceuticals as a way to expand its cosmetic treatments. Through the acquisition, AGN will gain access to Kybella; which is Kythera’s first and only approved non-surgical treatemnt to reduce fat under the chin. All in all, this deal is proving to be positive for both sides.
How The Market Is Reacting To The News
Although AGN is trading relatively flat today with gains so far of under 1%, that’s not the case for KYTH. When it comes to KYTH, the stock soared in early morning trading and has stayed flat for the rest of the day. Currently (3:25), KYTH is trading at $74.12 per share after a massive gain of 22.07%.
What To Expect Moving Forward
Moving forward, I’m expecting to see great things from Allergan. In this particular case, I don’t think the outlook can be stated better than the commentary that Jim Cramer provided…
“We believe this is a genius deal for Allergan, which this week officially changed its name from Actavis. KYTH is known for having the first and only approved non-surgical treatment for contouring moderate to severe submental fullness, a.k.a. \double chin, with its drug kybella. This perfectly complements the Allergan name, which is known for the famous anti-wrinkle injection Botox, as the company now owns the most important piece of human real estate – the face – through its various treatments directed toward the forehead, eyes, mouth and now chin.”
While the acquisition is indeed brilliant, outside of the acquisition, I believe AGN was already bound for more growth. With the famed Botox, AGN was put on the map; and with strong management the company has stayed there. Now, with the acquisition giving them the ability to target yet another area in cosmetics, the company is only going to get stronger. So, if you’re looking for a biotech gem, it may be time to start looking at AGN for pull backs that are likely to lead to incredible profits in the long run.
What Do You Think?
Where do you think AGN is headed moving forward and why? Let us know in the comments below!