2023-05-16 08:14:55 ET
Horizon Therapeutics ( NASDAQ: HZNP ) plummeted 18% in premarket trading on reports that the Federal Trade Commission plans to challenge the company's $28 billion sale to Amgen ( NASDAQ: AMGN ). Amgen ( AMGN ) ticked up 0.6%.
The FTC is expected to file a lawsuit to block the combination as soon as Tuesday, according to media reports , including Bloomberg. Amgen ( AMGN ) agreed to acquire Horizon Therapeutics ( HZNP ) for $116.50 a share in cash in December, valuing the Ireland-based biotech at nearly $27.8 billion.
If the deal were to fall apart Horizon ( HZNP ) stock may fall to $80-$90, Wells Fargo analyst Mohit Bansal wrote in a note on Tuesday.
"While AMGN and HZNP marketed products do not overlap, recent FTC scrutiny seems to be pushing it a bit further than traditional overlapping markets and investigating if a single player is becoming stronger," Bansal wrote.
Amgen ( AMGN ) shareholders don't like the deal in the first place, according to Bansal, so they may be "indifferent" to a deal break. Bansal sees Amgen fair value of $255 a share without Horizon ( HZNP ).
RBC analyst Gregory Renza doesn't see an FTC lawsuit as necessarily a deal killer and sees path to getting a deal done.
"The reports of the potential FTC action, at first pass do not look insurmountable, citing concerns on the eczema and lupus categories where both parties have programs under development though no commercial muscle," Bansal wrote in a note on Monday. "Based on the limited information available, we believe parties willing to engage could find a way to resolution given the small areas of development relative to the larger portfolios."
Earlier this month a UBS analyst wrote that Horizon Therapeutics ( HZNP ) standalone value is in the $65-$70 a share range, though the deal was likely to gain regulatory approval.
Seagen ( SGEN ) the cancer-focused biotech company that Pfizer ( PFE ) agreed to buy in March for $43 billion , fell 5% in premarket trading, as investor are likely concerned that regulators could also look to block the megadeal.
"This development could put ongoing deals and future big deals in question - If this scrutiny is indeed related to stop bigger deals, we suspect it could make investors jittery around PFE-SGEN," Bansal wrote.
More on Horizon/Amgen
- Amgen: Questioning The Horizon Therapeutics Acquisition
- Horizon Therapeutics: Attractive 7.16% Upside To Amgen Deal
- Amgen's acquisition of Horizon Therapeutics on track to close in 1H - report
For further details see:
Horizon Therapeutics plunges as potential FTC lawsuit increases risk to Amgen deal