Market Overview

MAP Skyrockets Off the Map on Allergan Acquisition

MAP Pharmaceuticals (NASDAQ: MAPP) is blasting into orbit today on word the company will be acquired by Irvine, California drug manufacturer Allergan (NYSE: AGN).

On Tuesday, MAP announced Allergan will purchase 100 percent of its shares at $25 each. Overall, the value of the purchase is an estimated $958 million.

Of important note is that the deal is not subject to a financing contingency. Allergan expects to make the purchase using cash on hand, cash equivalents and short-term borrowings under its commercial paper program. The deal is expected to close late in the first quarter or in the second quarter.

More Good News for Allergan

Allergan's purchase of MAP comes on the heels of several recent positive developments for the company.

On January 18, Allergan announced FDA approval of BOTOX for the treatment of overactive bladder. As many will recall, BOTOX is the controversial drug that first became popular as a tool for removing wrinkles. Allergan reports distributing approximately 35 million vials of the drug between 1990 and 2011, meaning the latest approval could be a significant boost to the company's sales.

Also, Allergan made another acquisition late in 2012. On December 19, the company noted the completion of its SkinMedica acquisition. Allergan bought the skincare company for around $350 million.

Additionally, Wells Fargo reaffirmed its “outperform” rating of the California company last week, as notes American Banking & Market News.

Market Reaction

To say that investors are excited about MAP's role in this deal would be an understatement.

In the morning hours of trading on Wednesday, MAP has risen well over 58 percent. After trading in the low-to-mid teens for the past three years, MAP has surged to nearly $25 per share.

Meanwhile, investors have been a lot less enthusiastic about Allergan's role in the deal. The stock has hovered around $105 for over a week and currently sits above $104. It is down over one percent for the day, perhaps due to the company's anticipation that this deal will be dilutive to the tune of $0.07 per share in 2013.

Look for MAP to continue its market success in the short term as the acquisition unfolds. On the other hand, it appears Allergan will remain steady in the market as investors remain cautious on this stock

Posted-In: BOTOX FDA SkinMedicaNews Reiteration FDA M&A Analyst Ratings Best of Benzinga

 

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