Summary
- Progenics recently announced an agreement to be acquired by Lantheus Holdings in an all-stock transaction. At the time of the announcement, the transaction would value PGNX at ~$500M-$600M.
- I provide a brief background on Lantheus and review the details of the acquisition agreement.
- I discuss my views of the deal and how this agreement impacts my PGNX strategy. In addition, I debate starting a position in LNTH.
On October 2nd, Lantheus Holdings (LNTH) Progenics Pharmaceuticals (PGNX), announced an agreement for Lantheus to acquire Progenics in an all-stock transaction. According to the press release, "the transaction has been unanimously approved by the Boards of Directors of both companies." Unfortunately, not every shareholder is supporting the company's decision, most notably, Velan Capital is concerned that the deal "substantially undervalues the Company and is a transparent and shameful maneuver attempting to prevent the voices of stockholders from being fairly heard." Based on the details and value of LNTH, the deal would value Progenics at roughly $500M-$600M. The market has quickly done the math on the valuations, with both stocks now trading in relation to one another. Unfortunately, both stocks haven't seen a positive reaction to the news with LNTH dropping from ~$24 to $18 per share, and PGNX is basically flat.
Figure 1: LNTH Daily (Source: Trendspider)
Figure 2: PGNX Daily (Source: Trendspider)
I believe PGNX shareholders have the right to feel they are getting fleeced on the valuation and are now linked to LNTH until they vote for approval. Personally, I was hoping for a premium payout, but I have to make a decision on what I am going to do with my PGNX position. Should I buy, sell, or hold my PGNX? What about LNTH?
I intend to provide a brief overview of Lantheus Holdings and review the details of the agreement. In addition, I attempt to show some potential synergies between the companies and how I would value the combined company. Finally, I discuss my plans for my PGNX position and is LNTH is worth a buy.
