AMAG Pharmaceuticals (AMAG) Stock Climbs On Takeover Chatter

AMAG Pharmaceuticals AMAG Stock News

AMAG Pharmaceuticals, Inc. (NASDAQ: AMAG) is making a run for the top in the market this morning, trading on gains of more than 40% early on. If you’re digging for SEC filings or press releases, you’re not going to find anything. However, there’s good reason for the gains. Investors seem to be reacting to a rumor suggesting that a takeover is coming soon. Here’s what’s going on:

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AMAG Heads For The Top On Takeover Chatter

As mentioned above, AMAG Pharmaceuticals didn’t release any press or file anything with the SEC, but the stock is flying. The gains seem to be related to rumors that the company will be acquired soon.

The rumors suggest that Apollo Global Management’s portfolio company, Covis Pharma, is interested in acquiring the company.

Before we go any further, I want to make it very clear… these are rumors. We see rumors in the market all the time. In most cases, these rumors are invalid and unsubstantiated. At the moment, there is no verification from either of the two parties that a discussion is even taking place.

Nonetheless, every once in a while, rumors are built around fact and the takeover does happen. The rumor surrounding AMAG has a strong chance of being one of these cases.

First and foremost, AMAG has plenty of value to offer Covis Pharma. The company sells Makena for the reduction of risk of premature birth. The company also sells Feraheme, a treatment for iron deficiency.

At the same time, the stock has seen dramatic declines over the past five years. In fact, five years ago, it was trading well over $60 per share. Yesterday, the stock closed below $10 per share. Moreover, many believe that it is highly undervalued.

So, if Covis Pharma is interested and does take the company over, it’s likely going to receive a deep discount on a company with two revenue-generating assets and two other potentially profitable assets in its pipeline. As such, Covis could be getting a very good deal here.

The Bottom Line

The bottom line is that there is no verification that AMAG Pharmaceuticals and Covis Pharma are even in talks. However, if they are, this could be a big story very soon. The fact of the matter is that there are plenty of reasons Covis may be interested in acquiring the company and that AMAG stock is well worth watching closely.

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