The biggest winner in Wednesday’s trading session was a mid-cap biotech company. Shares of Cambrex (NASDAQ: CBM) jumped by almost 50 percent, getting close to hitting a 10-month high in premarket trading, in response to a buyout deal. The drug product and analytical services company agreed to be bought out in a deal that would price the stock at a 47 percent premium.
The deal would see Permira acquire the biotech company for $2.4 billion, which includes Cambrex’s net debt, with shareholders getting a highly generous $60 per share in cash for each stock they own.
While somewhat of a generic biotech company with few well-known drugs to its name, Cambrex does have a reputation as a leading manufacturer in the small molecule space over the past few years.
“We are excited to announce this transaction with Permira, a global private equity firm that has made significant investments in the pharma services space. This agreement is a strong endorsement of our strategy and represents significant value for our shareholders. Cambrex will continue to invest aggressively in our commitment to our global customer base, where we are constantly looking at ways to provide the broadest possible range of world class services,” said Steve Klosk, President and CEO of Cambrex. “Over many years, Cambrex has built a leading position with best-in-class capabilities and facilities, backed by an excellent reputation for quality and technical expertise. We look forward to partnering with Cambrex’s talented management and employees to support the growth of its integrated services offering,” added Henry Minello of Permira.
Over the past six months, shares have been struggling around the $40 price range, staying relatively the same and failing to break out substantially. The stock ended up tumbling significantly in late 2018, with prices falling from almost $70 to as low as $37 at one point in December 2018.
While today’s jump to $60 per share might not be enough to cover some of the losses that shareholders have seen over the past 12-months, they are more than happy that they managed to secure such a generous buyout offer in the first place.
What’s even more significant for the shareholders, however, is that this might not be the end of the story. With a 45-day timeframe to actively seek out competing offers, it’s entirely possible to see an even larger premium offered by another rival.
While there’s no guarantee this will take place at all, it’s still a possibility. Even if this doesn’t happen, investors will end up appreciating significant value growth with this deal that’s now on the verge of becoming a reality.
Cambrex Company Profile
Cambrex Corp is a biotechnology company focused on developing and commercializing new and generic therapeutics. The company primarily supplies its products and services worldwide to innovator and generic pharmaceutical companies. Cambrex’s portfolio growth strategy has a particular focus on the later stages of the clinical trial process.
It also works to secure long-term supply agreements to produce active pharmaceutical ingredients and intermediates for newly approved drug products. Additionally, Cambrex sometimes works with partners to co-develop portfolios of niche generic drug products in a finished dosage form. – Warrior Trading News
