Pharmaceutical giant Bristol Myers (NYSE:BMY) Squibb Co., led by CEO Giovanni Caforio, is set to acquire oncology therapies developer Mirati Therapeutics (NASDAQ:MRTX) Inc., in a deal totaling up to $5.8 billion, as announced on Sunday. The acquisition includes $58 per share in equity value ($4.8 billion) and an additional potential $1 billion through non-tradeable Contingent Value Rights, marking a significant move for the company with a market cap of $118.4 billion, according to InvestingPro real-time metrics.
InvestingPro Tips suggest that Bristol Myers Squibb is a prominent player in the Pharmaceuticals industry with high earnings quality, as its free cash flow exceeds net income. The company's management has been aggressively buying back shares, indicating confidence in the company's future. Moreover, the company is expected to see its net income grow this year, making this acquisition an interesting move to watch.
The merger positions Bristol Myers Squibb to expand its portfolio with drugs such as lung-cancer medicine Krazati, aligning with its business development goals and creating value for shareholders. Bristol Myers Squibb's non-GAAP earnings are anticipated to dilute by 35 cents per share in the first year following the merger.
Bristol Myers Squibb's shares have seen a 21% decline year to date, according to InvestingPro Data. This decline is despite the fact that the company has maintained dividend payments for 53 consecutive years and is trading at a low P/E ratio relative to near-term earnings growth.
On the other side of the deal, Mirati's shares, which closed at $60.20 on Friday, have risen by 33%. This is against the backdrop of the S&P 500 gaining about 12% in 2023. Mirati Therapeutics, valued at approximately $4.21 billion, holds more cash than debt on its balance sheet and has seen a significant return over the last week, as per InvestingPro Tips.
Mirati Therapeutics is set to become a part of Bristol Myers Squibb's extensive portfolio if the deal finalizes as expected in the first half of 2024.
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