GW Pharmaceuticals stock soared 46% on Wednesday after Jazz Pharma said it would buy the company for $7.2 billion.- The proposed deal will include $200 in cash and $20 in shares of Jazz Pharma, and is expected to close in the second quarter of 2021.
- GW Pharma is the first company to receive FDA approval for medicine derived from the cannabis plant.
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GW Pharmaceuticals soared as much as 46% on Wednesday after Jazz Pharma said it would acquire the company for $7.2 billion in cash and stock.
GW Pharma develops therapies derived from the marijuana plant. The UK-based company was the first to receive FDA approval for a cannabinoid-based therapy, Epidiolex, which is used to treat seizures in patients one-year and older.
Epidiolex has hit approximately $510 million in annual sales within two years of its launch.
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GW Pharma's pipeline is centered around cannabinoid-based medicines targeting epilepsies within neuroscience.
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GW Pharma investors will receive $200 in cash and $20 in Jazz stock per share. The proposed deal price represents a 50% premium over GW's closing stock price on February 2 of $146.25.
Jazz will fund the acquisition with a combination of cash and debt financing.
"Given the strength of our balance sheet and the meaningful financial drivers of the transaction, we are confident in the value we can deliver to both companies' shareholders and patients," Jazz CEO Bruce Cozadd said.
The board of directors of both companies have approved the proposed merger and the deal is expected to close in the second quarter of 2021.
Shares of Jazz Pharma traded down 6% in Wednesday trades on the news.