Ambrx Biopharma (NASDAQ: AMAM) shares skyrocketed after Johnson & Johnson (JNJ) announced plans to acquire the company, boosting its oncology unit.
According to the official press release, Johnson & Johnson will purchase all existing Ambrx shares for $28 each in cash, reflecting a 105% premium over the January 5 closing price of AMAM stock. The overall equity value of the transaction is around $2 billion.
Johnson & Johnson (NYSE: JNJ) also plans to collaborate with Ambrx researchers to speed up early-stage therapeutic studies for advanced prostate cancer. In addition, J&J will work on developing the Ambrx pipeline of new product candidates.
The transaction, approved unanimously by the Ambrx board of directors, is expected to be finalized in the first half of this year.
Ambrx Biopharma (NASDAQ: AMAM) expressed delight about the buyout, with CEO Daniel J. O’Connor stating,
“We are excited to reach this agreement with Johnson & Johnson for advancing scientific research to treat cancers with high unmet needs.”
AMAM stock surged more than 100% on Monday to close at $27.47, whereas Johnson & Johnson (NYSE: JNJ) shares witnessed a modest decline, possibly due to investor concerns about the premium. But, the long-term perspective suggests that the all-cash acquisition of AMAM stock is appealing.
In Q3 2023, the J&J Innovative Medicine segment recorded revenue of $13.89 billion, marking a 5% rise from the $13.21 billion in the year-ago quarter. The oncology unit reported $4.53 billion in sales, reflecting a 12% year-over-year increase. Therefore, the Ambrx acquisition is expected to further boost momentum in what is a successful venture for J&J.
Before the acquisition announcement, AMAM stock held a consensus analyst rating of strong buy, with an average price target of $24.50, closely in line with the acquisition price. In contrast, JNJ received a moderate buy assessment with a $178.08 price target, suggesting an 11% upside.
Jennifer Tacker is a staff writer at ABBO News. She holds a B.A. from the University of Waterloo and a B.Ed from Western University. Jennifer has been active in the stock market and crypto sector for a decade. She specializes in technical analysis and trading strategies.
