PFE - Cerevel Therapeutics: Time For A Risk Arbitrage Play?
2024-06-04 04:20:17 ET
Summary
- Cerevel Therapeutics agreed to be acquired by AbbVie on 12/06/23 for $45/s or ~$8.7B.
- CERE stock closed on Friday, May 31st at $40.74/s. This presents investors with a potential arbitrage play of over 10% on a deal that should close within the next 3–6 months.
- There are significant risks to consider before making this type of investment.
- Based on what we know at this point and the historical rates of approval for these types of deals, I believe like many that the deal will close before the end of the year and the full $45/s purchase price will be achieved.
Introduction
Cerevel Therapeutics (Nasdaq: CERE ) was created as a spinout for Pfizer's (NYSE: PFE ) central nervous system pipeline assets. The birthing process involved Perceptive Advisors using its ARYA II SPAC to effectively buy the assets with Bain Capital for $439.5M on 07/29/20, and then launch and rename the company to Cerevel. CERE focused diligently on its lead assets, taking them from the early clinic into placebo controlled studies, and even got one asset into phase 3 studies. There were a couple of capital raises along the way by the company as well as a debt offering until it agreed to be acquired on 12/06/23 by AbbVie (NYSE: ABBV ) for $45/s or ~$8.7B.
The deal is very good for ABBV and CERE's shareholders. ABBV gets complementary CNS assets for its growing neuroscience division, and CERE's shareholders get a very profitable exit before potential commercialization of its lead assets. The FTC is reviewing the deal and CERE stock closed on Friday, May 31 st at $40.74/s. Because the deal hasn't closed yet, there is an opportunity for a short-term risk arbitrage play here with a potential upside of over 10% within the next 3-6 months....
Cerevel Therapeutics: Time For A Risk Arbitrage Play?