JAZZ announced today that it will acquire GW (GWPH), a maker of cannabis-based drugs, in a cash and stock deal worth more than $ 7 billion. Under the offer, it will pay a 50% premium on GW’s closing price from last night, with the company paying $ 200 in cash and $ 20 in shares for each share.
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Following the joint announcement of the two companies, GW shares flew close to 50% in pre-trade, while Jazz fell about 4%, having already fallen by more than 5%. Probably a factor as to why they’re doing so poorly. The company’s market share is about $ 9 billion.
GW sells a drug called Epidiolx for children with severe epilepsy and was approved for use in 2018 by the US Food and Drug Administration (FDA), which is based on cannabidiol, which comes from cannabis strains that are low in the active ingredient THC.
Jazz specializes in a number of drugs for cancer and a number of other diseases, but is best known for its drug for narcolepsy, called Xyrem. The transaction was approved by the boards of directors of the 2 companies and is expected to take effect at the beginning of the second quarter.
The acquisition further establishes the status of the cannabis plant as a legitimate drug, since so far most pharma companies are moving away from acquisitions in the field, as the plant is not like a pill for which the tumor can be produced over time.
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