Imago Biosciences (US:IMGO) took center stage on Monday, rising 104.5% after noting it had received a takeover offer from pharmaceutical giant Merck (US:MRK) in a deal worth around $1.35 billion.

Imago is a clinical stage biopharma company focused on developing new medicines to treat myeloproliferative neoplasms (MPNs) and other bone marrow diseases.

Both companies entered a definitive agreement where Merck would acquire Imago for $36.00 per share in cash. The offer represented a 105% premium to IMGO’s closing share price last Friday.

The deal comes at a time when Merck is looking for acquisitions to fill the gap of Keytruda cancer immunotherapy revenue which is set to decline from 2028 from the expected loss of key patients.

Under the terms, Merck’s subsidiary will begin a tender offer to acquire all outstanding shares of Imago and will require the majority of the total number of shares to participate.

The deal is expected to close in the first quarter of 2023.

Merck’s CEO Robert Davis commented on the transaction, telling investors, “This acquisition of Imago augments our pipeline and strengthens our presence in the growing field of hematology.”

Imago’s CEO and Founder, Dr. Hugh Rienhoff, believes the transaction will allow Merck to leverage its industry-leading clinical development expertise to maximize the potential of bomedemstat while creating value for shareholders.

Jefferies investment bank analyst Maury Raycroft commented on the deal, noting that he believes the valuation makes sense given the market opportunity for the treatment of essential thrombocythemia (ET) and the stage of development currently in Phase 2 trials.

Raycroft did highlight that other bidders can emerge. However, he believes the current offer is at fair value, implying the possibility is unlikely.

Any investors who participated in Imago’s mid-2021 IPO or bought the stock on market have all been rewarded with a significant return on investment in just over one year!

Fintel’s fund sentiment score of 72.84 is bullish on IMGO’s institutional buying activity. The score ranks IMGO in the top 13% of 35,654 screened global securities. The above average level of institutional buying activity explains the strength and momentum experienced before the takeover offer. The IMGO share price outperformed indexes over 2022.

IMGO currently has 212 institutions on the register that own 33.2 million shares. Some of the largest institutions include Omega Fund Management, Frazier Life Sciences Management, and Farallon Capital Management.

The chart provided below shows the growing level of institutional share ownership in the stock since listing:

 

This article originally appeared on Fintel

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