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AMAG (AMAG) to be Acquired by Covis Group for $647 Million

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AMAG Pharmaceuticals, Inc.’s shares rose 45.2% on Oct 1, after the company entered into an agreement with Covis Group S.a r.l. Covis will acquire AMAG for approximately $647 million, as part of the agreement. Covis will commence a tender offer to acquire all the outstanding shares of AMAG for a purchase price of $13.75 per share in cash, or approximately $647 million, including debt obligations expected to be assumed or repaid net of cash. The offer represents a premium of approximately 46% to the closing price of AMAG’s common stock on Sep 30. However, shares of AMAG have increased 12.9% year to date against the industry’s decline of 3%.

 

AMAG has two commercial products. One is Makena (hydroxyprogesterone caproate injection) to decrease the risk of preterm birth in women with a singleton pregnancy having a history of singleton spontaneous preterm birth. The other is Feraheme (ferumoxytol injection) for the treatment of iron deficiency anemia in adults who are intolerant to oral iron or do not respond to it or have chronic kidney disease. It also has a few drugs in development like AMAG-423, which is being developed for the treatment of severe preeclampsia. Ciraparantag is an anticoagulant reversal agent, acquired from Perosphere Pharmaceuticals. Ciraparantag is being developed for patients treated with novel oral anticoagulants or low molecular weight heparin when reversal of the anticoagulant effect of these products is needed for emergency surgery, urgent procedures or due to life-threatening or uncontrolled bleeding. 

In the beginning of 2020, AMAG undertook a strategic review of its product portfolio and strategy, which included driving near- and long-term profitability and enhancing shareholder value. As part of the strategic review, the company divested its women’s health assets, and made other efforts to streamline as well as strengthen the core business. This will position AMAG well for the future. The company believes that by combining with Covis, its shareholders would get certain and immediate cash value. Per AMAG, both the companies have a shared vision of making their therapies reach patients in need.

Covis plans to finance the transaction with cash on hand, and a combination of committed debt as well as equity financing. As part of the transaction, Covis intends to enter into an amended and restated credit facility with the current lenders, pursuant to which the lenders will provide up to a $460 million senior secured incremental term loan and $55 million secured revolver. 

The transaction is expected to close in November 2020.

Zacks Rank & Stocks to Consider

AMAG currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the healthcare sector include Emergent Biosolutions Inc. (EBS - Free Report) , Horizon Therapeutics Public Limited Company and Ligand Pharmaceuticals Inc. , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Emergent’s earnings estimates have increased from $4.03 to $6.61 for 2020 and from $5.07 to $7.62 for 2021 over the past 90 days. Shares of the company have increased 85.8% year to date.

Horizon’s earnings estimates have increased from $2.00 to $2.86 for 2020 and from $3.05 to $4.34 for 2021 over the past 60 days. Shares of the company have increased 120.5% year to date.

Ligand’s earnings estimates have increased from $3.70 to $4.00 for 2020 and from $4.40 to $8.00 for 2021 over the past 60 days. Shares of the company have decreased 6.8% year to date.

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