Analyst Forecasts $101-117/Share Offer Price For Horizon Therapeutics' Buyout

  • Horizon Therapeutics Plc HZNP confirmed it's engaged in preliminary talks with Amgen Inc AMGNJanssen Global Service, and Sanofi SA SNY on potential takeover offers for the company. 
  • SVB Leerink projects 2023 revenue of $4.0 billion, adj operating income of $1.6 billion, and EPS of $5.51. 
  • Assuming no COGS nor R&D synergies but "fully synergized" SG&A of 21%, the company's theoretical 2023 fully synergized operating margin would be 54%, and adj EPS would be $7.79. 
  • If an acquirer were to pay a low-mid teens (13-15x) multiple of SVB's estimate of fully-synergized adj EPS, it could yield a potential acquisition price of $101-117/share. 
  • Valuation could be higher if an acquirer assumes faster long-term growth prospects or lower if an acquirer is concerned about the potential late-decade erosion of Tepezza following chronic market penetration and new thyroid eye disease competitive entrants.
  • For Johnson & Johnson JNJ, a deal would be on top of the recently-announced $16.6 billion acquisition of medical device firm Abiomed ABMD. Still, it would help partially offset the upcoming Stelara LOE impact on Pharma Immunology segment revenues.
  • For Sanofi, Horizon's assets could fit with the company's focus on I&I and Rare Diseases, but appetite is unclear.
  • For AMGN, Horizon's I&I and rare disease franchises would also fit. Horizon could help drive revenue & profit growth mid-late decade when Amgen faces generic and biosimilar pressures on key franchises.
  • Price Action: HZNP shares are up 26.9% at $99.94 on the last check Wednesday.
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