Medivation (MDVN) Stock: Soaring on PFE Acquisition

Medivation Inc (NASDAQ: MDVN) | Pfizer Inc. (NYSE: PFE)

Medivation is having an incredible day in the market today, and for good reason. Early this morning, it was announced that Pfizer would be acquiring the company. Today, we’ll talk about the details of the acquisition, how the stocks reacted to the news and what we can expect to see from MDVN and PFE ahead. So, let’s get right to it…

PFE To Acquire MDVN

As mentioned above, Medivation is having a great day in the market today after announcing that the company will be acquired by Pfizer. According to the announcement, the acquisition will take place in an all cash deal. Under the terms of the agreement, PFE will pay MDVN a total of $81.50 per share for a total acquisition value of about $14 billion.

It has also been announced that the announced that the boards of both companies have already unanimously approved the merger. Also, PFE said that the acquisition of MDVN is not expected to change guidance for the year 2016 in any respect. In a statement, Ian Read, Chairman and CEO at PFE had the following to offer…

The proposed acquisition of Medivation is expected to immediately accelerate revenue growth and drive overall earnings growth potential for Pfizer… The addition of Medivation will strengthen Pfizer’s Innovative Health business and accelerate its pathway to a leadership position in oncology, one of our key focus areas, which we believe will drive greater growth and scale of that business over the long term. This transaction is another example of how we are effectively deploying our capital to generate attractive returns and create shareholder value.”

The above statement was followed up by David Hung, M.D., founder, president and CEO at MDVN. Here’s what he had to say…

We believe the combination with Pfizer is the right next step in our growth trajectory and is a testament to the passion and dedication by which the Medivation team has delivered on our mission to profoundly transform patients’ lives through medically innovative therapies… This compelling transaction will deliver significant and immediate value to our stockholders and provides new opportunities for our employees as part of a larger company. We believe that Pfizer is the ideal partner to extend the reach of our blockbuster XTANDI franchise and take our promising, late-stage assets – talazoparib and pidiluzimab – to their next stages of development so that they can be made available to patients as quickly as possible.”

How The Stocks Reacted To The News

One of the first things that we learn as investors is that the news moves the market. Positive news tends to lead to gains while negative news leads to declines. While the move is being perceived as overwhelmingly positive by MDVN investors, PFE investors clearly have their reservations. Currently (3:02), Medivation is trading at $80.39 per share after a gain of $13.23 per share or 19.70% thus far today. Pfizer is currently trading at $34.81 per share after a loss of $0.16 per share or 0.46% thus far today.

What We Can Expect To See Moving Forward

Moving forward, PFE will be absorbing MDVN. As a result, the forward looking picture is all about Pfizer. With that said, I have an overwhelmingly bullish opinion of what we can expect to see moving forward. Pfizer has already built its name as a leader in the pharmaceuticals industry. With several already approved products and a strong pipeline, growth is likely ahead. Now, adding the list products, both approved and in the pipeline from the MDVN acquisition is icing on the cake. All in all, I’m expecting to see gains ahead.

What Do You Think?

Where do you think PFE is headed moving forward? Join the discussion in the comments below!