Pfizer (PFE, Financial) reported Monday that it would be acquiring, biopharmaceutical company, Medivation (MDVN, Financial). Pfizer will pay $81.50 per share for a total value of approximately $14 billion. Shares of Medivation opened higher on Monday and gained approximately 20%.
Medivation is a leading cancer drug provider, and the acquisition will expand Pfizer’s drug offerings in oncology. In the most recent quarter, Pfizer reported total revenue of $13.15 billion with earnings per share of 64 cents.
Pfizer has two primary business segments which include innovative health and essential health. Medivation’s cancer drug products will primarily contribute to Pfizer’s innovative health oncology business which accounted for 8% of revenue in the second quarter with a comparable quarter revenue growth rate of 54%.
Primarily focused on oncology drugs, Medivation will bring approximately $206 million in quarterly revenue to the Pfizer innovative health oncology business segment. Pfizer does not anticipate a high level of expenses associated with the transaction which will help to make it immediately accretive. The transaction is expected to add 5 cents to adjusted earnings per share in the first full year following the acquisition.
In the second quarter, Pfizer reported adjusted earnings per share of 64 cents.
In the announcement, Pfizer reported it would maintain its current guidance for 2016. It expects revenue of $51.0 billion to $53.0 billion for the year with adjusted earnings per share of $2.38 to $2.48.
Currently Capital World Investors is a leading shareholder of Pfizer while FMR LLC holds the leading shareholder position in Medivation.
In a report Monday, CNBC provided the following additional details about Pfizer’s acquisition.
Disclosure: I do not own any shares of any companies included in this article.
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