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Why Global Blood Therapeutics Stock Was Trouncing the Market Today

What happened

Trading in Global Blood Therapeutics (NASDAQ: GBT) stock was lively on Monday, with the blood-disorder-focused biotech rising by over 4% over Friday's close by midafternoon today. That's hardly surprising, as the company struck a deal to be acquired by one of the hottest operators in the pharmaceutical sector.

So what

In a joint press release Monday morning, Global Blood Therapeutics and Pfizer (NYSE: PFE) announced that they have signed an agreement for the latter to purchase the former. The all-cash deal will see Pfizer acquire all outstanding shares of Global Blood Therapeutics for $68.50 per share; all told, the enterprise value of the arrangement is roughly $5.4 billion.

The companies added that both their boards of directors have unanimously approved the deal.

Global Blood Therapeutics is specifically concentrating on sickle cell disease (SCD) these days. SCD is a common blood disorder that disproportionally affects African-Americans.

The two companies are touting the synergistic nature of the deal. In its press release, Pfizer CEO Albert Bourla was quoted as saying, "The deep market knowledge and scientific and clinical capabilities we have built over three decades in rare hematology will enable us to accelerate innovation for the sickle cell disease community and bring these treatments to patients as quickly as possible."

Now what

Pfizer said it aims to finance the Global Blood Therapeutics purchase with cash on hand. At the end of its most recently reported quarter, the pharmaceutical giant had nearly $24 billion in cash and short-term investments on its books.

The acquisition is still subject to approval by Global Blood Therapeutics shareholders, although it's hard to imagine a scenario in which a majority would give the thumbs-down to being bought out by Pfizer. The deal is also subject to review by the relevant regulatory authorities.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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