Cambrex Corporation (NYSE: CBM) is making a run in the market this morning, trading on gains of more than 47% early on. The gains come after the company announced that it has entered an agreement to be acquired. Here’s what’s going on:
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CBM Stock Soars On Acquisition News!
In a press release, Cambrex said that it has entered into a definitive agreement. Under the terms of the agreement, an affiliate of the Permira funds will pay about $2.4 billion to take the comapny over.
The total of $2.4 billion includes debt held by CBM. In exchange for their shares, shareholders will receive $60 for each share held. This price represents a premium of 47.1% over yesterday’s close and a premium of 37.3% to the 60-day volume weighted average closing price.
According to the release, the company may actively solicit acquisition proposals from third parties during a 45-day “go-shop” period. This period will start from the date of inception of the agreement. This gives the company the ability to take a larger offer by a third party.
As is just about always the case, the transaction completion is subject to customary closing conditions. These include both shareholder and regulatory approvals. Nonetheless, closing of the transaction is expected to take place in the fourth quarter of 2019.
In a statement, Steve Klosk, President and CEO at CBM, had the following to offer:
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.
The above statement was followed up by Henry Minello, Principal in the Global Healthcare Group of Permira. Here’s what he had to say:
We are very excited to back Cambrex in its next phase of growth. 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.
This News Is Significant
At the end of the day, no matter how this goes, this news is significant. First and foremost, the deal that is already on the table represents a significant premium to yesterday’s closing price on the stock. However, this may not be where it ends.
With 45 days to actively seek competing offers, we could see an even larger premium offered. Of course, there’s no assurance that this could take place, but even if this doesn’t take place, investors will enjoy significant value growth with the deal that’s on the table.
So, no matter how this ends up, investors have a lot to look forward to.
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