Dublin-based Jazz Pharmaceuticals PLC (NASDAQ: JAZZ) announced Wednesday morning that it has agreed to acquire London-based GW Pharmaceuticals PLC (NASDAQ: GWPH) for $220 per American depositary share (ADS). The transaction comprises $200 per share in cash and $20 in shares of Jazz (about 0.127 shares). Net of GW Pharma’s $500 million in cash, Jazz is splashing out $6.7 billion in the deal.
GW Pharma made some noise in mid-2018 when its cannabis-based treatment for certain kinds of seizures (epilepsies) was approved for sale in the United States. Epidiolex is a highly purified cannabidiol (CBD) derived from cannabis but lacking the psychoactive ingredient most people associate with marijuana. The drug was the first plant-derived CBD medicine ever approved by the U.S. Food and Drug Administration. GW Pharma also sells the drug in Europe under the trade name Epidyolex.
According to the announcement, GW Pharma’s pipeline includes nabiximols, currently in Phase 3 trials to treat spasticity related to multiple sclerosis and spinal cord injuries. The drug is also derived from cannabis.
Jazz Pharma’s CEO, Bruce Cozadd, commented: “We are excited to add GW’s industry-leading cannabinoid platform, innovative pipeline and products, which will strengthen and broaden our neuroscience portfolio, further diversify our revenue and drive sustainable, long-term value creation opportunities.”
The company adds GW Pharma’s treatments for epilepsies to its own drugs for treating sleep disorders and cancers (oncology).
Jazz Pharma expects the combination to add to expected double-digit revenue growth in the first full year after the acquisition is completed. The companies plan to close the transaction in the second quarter of this year.
Under the terms of the agreement, each GW Pharma ADS (equal to 12 ordinary shares) will receive $220 in cash and Jazz Pharma stock, representing a premium of approximately 50% to GW Pharma’s closing price on Tuesday of $146.25. Holders of GW Pharma’s ordinary shares will receive one-twelfth of the payment for each ordinary share owned.
Jazz Pharma expects to fund the transaction through a combination of cash on hand and a fully committed debt financing from BofA Securities and JPMorgan Securities.
The transaction is subject to approval by GW Pharma shareholders and the High Court of Justice of England and Wales, along with other customary closing conditions.
GW Pharma’s stock traded up more than 47% early Wednesday to $215.50, well above the top end of its prior 52-week range of $67.98 to $162.87.
Shares of Jazz Pharma traded down fractionally, at $156.48 in a 52-week range of $86.88 to $171.77. The consensus 12-month price target on the stock is $183.22.
Neither company pays a dividend.