Are BioSpecifics Shareholders Getting Enough in the Endo Buyout?

Health and Healthcare

Published: October 19, 2020 10:53 am

News that Endo International PLC (NASDAQ: ENDP) would acquire BioSpecifics Technologies Corp. (NASDAQ: BSTC) sent shares of the latter rocketing higher on Monday. Both boards of directors have unanimously approved the merger agreement.

The price tag on this acquisition is $88.50 per share, or about $658 million in aggregate. That is roughly $540 million in enterprise value net of cash on hand. Endo is commencing an all-cash tender offer at the aforementioned price and is funding it with cash on hand.

Are BioSpecifics shareholders actually getting a good deal?

Excluding Monday’s move, BioSpecifics stock was up just 7% year to date, barely lagging the S&P 500. In the past 52 weeks, the share price was up closer to 24%, beating the broad markets.

This transaction implies premiums of 47.2% and 49.9% from the 50-day and 200-day moving averages of $60.11 and $59.03, respectively.

Note that this stock broke the $70 price level last year, but obviously this year has been much more difficult. Either way, the $88.50 price tag seems to imply a reasonable premium, considering the stock’s recent history.

What Endo gets from this deal is a company that pioneered the development of collagenase-based therapies. BioSpecifics has an injectable collagenase portfolio, consisting of Xiaflex to treat the vast number of diseases and medical conditions caused by the excess accumulation of collagen and Qwo for the treatment of cellulite

Look for this deal to close sometime in the fourth quarter of this year.

BioSpecifics stock traded up about 44% to $88.18 on Monday, in a 52-week range of $42.00 to $88.25. The consensus price target is $100.00.

Endo stock was up roughly 6%, at $5.28 in a 52-week range of $2.08 to $7.10. The consensus analyst target is $5.25.