THOR - Sanofi Is Paying a 172% Premium to Buy Synthorx -- and It Sounds Like a Good Deal for Both
On Dec. 9, pharmaceutical giant Sanofi (NASDAQ: SNY) said it's buying immuno-oncology company Synthorx (NASDAQ: THOR) for $2.5 billion to boost its cancer and autoimmune program. Considering the performance of Sanofi's businesses, the pipeline Synthorx brings to the table, and global projections for growth in the cancer immunotherapy market, the purchase sounds like a bargain for Sanofi. For Synthorx, which more than doubled research and development spending in a year's time, the financial power of a major player will be welcome.
Sanofi is paying $68 per share in cash, which is a 172% premium over Synthorx's previous closing price of $25.03. After the announcement, Synthorx's shares soared to the offer price, then closed at $67.71, while Sanofi's shares lost 1.6%. Sanofi, which plans to finance the deal with cash on hand, expects to complete the transaction in the first quarter of 2020.
A look at Sanofi's latest earnings report shows exactly why the move is the right one for the French company. Sanofi's traditional businesses of diabetes, cardiovascular, and vaccines are seeing sales decline in most territories, with only emerging markets contributing growth. The company reported a 9.9% decline in diabetes revenue in the third quarter and a 10.6% decrease in cardiovascular, while vaccine sales fell 9.8%.