The wave of consolidation in the pharmaceutical space shows no sign of slowing down as large pharmaceuticals rush to bolster their portfolios with drugs for rare conditions. Vitae Pharmaceuticals Inc (NASDAQ:VTAE) is the latest company to feel the full force of the consolidation wave in the space, Allergan plc Ordinary Shares (NYSE:AGN) having tabled a $639 million takeover bid.
Allergan’s $639 million bid values the Pennsylvania-based Vitae at $21 a share representing a 159% premium to the stock’s Tuesday closing price of $8.10 a share. Under the terms of the agreement, the all-cash deal should close before the end of the year.
“Vitae’s novel Contour drug discovery platform and its team, which have been instrumental in the discovery of novel ‘difficult to drug’ compounds, will be highly complementary to Allergan’s existing R&D discovery efforts. […],” said Allergan’s David Nicholson.
The merger does not in any way come, as a surprise given those Vitae has been on a fine run this year its stock having soared by 15%. Allergan stocks is also up by 20%.
Class Action Lawsuits
While the takeover news remains the talk of the town, some investors are already questioning whether the company’s board of directors fulfilled its fiduciary duties in squeezing as much value from the transaction. Even with a bumper 159% premium, some investors feel the board could have pushed for a much higher bid given the company’s fine run this year.
Harwood Feffer LLP and Brower Piven have already commenced investigations into possible breaches of fiduciary duty with the way Vitae reached an agreement with Allergan. According to the two law firms, the board could have pushed for a higher bid, given the stock’ $23 a share price target on Wall Street.
The lawsuits are not in any way expected to slow down Allergan pursuit of Vitae as it continues to look for biotech alternatives ale to bolster its dermatology franchise. Once complete, Vitae Pharmaceuticals Inc (NASDAQ:VTAE) will become the Ireland-based drug maker third acquisition since August as chief executive officer, Brent Saunders, continues to pursue growth through acquisitions.