Private investors are not stupid. Their view is much longer than this short term negativity. They have money and power and they can take HZNP private when they see value. Of course they see value in HZNP and that is why they pay over $27. If they want to buy that many shares(82m)$ thru the market, HZNP price will shoot over $35.
But price of new shares to be sold to private investors is above $27 and current share price will catch to it sooner or later. At this moment, retail and small shareholders are thinking is about dilution and they get scared. This is not different from offering shares to DEPO.
You mean you read what HZNP has filed today?
Who cares if a few million shares are traded at current price. This is 82m shares and no one can buy them except private investors.
Title of Each Class of Securities to be Registered
Offering Price(2) Amount of Registration Fee(3)
Ordinary shares, nominal value $0.0001 per share
81,706,881 N/A $2,273,171,432.49 $263,533.95
The filing is as today.
My guess is that the shares will be sold around $28 and if PP is removed then DEPO shares will be bought.
HZNP probably lined up some big investors who are buying DEPO shares now and HZNP will buy them from them at a few dollar higher if PP is removed. If PP is not removed, HZNP will go ahead and offer a price anyway like $26 which excites DEPO shareholders. If the announcement, HZNP allies can sell in the open market with higher prices anyway and get their profit. No one lose except and even DEPO shareholders enjoy higher prices for a while. .
Do you know how to read?
Horizon Pharma shareholders will also be asked to approve an increase in the authorized share capital of Horizon Pharma.
to issue Horizon Pharma ordinary shares for cash without first offering those shares to existing shareholders.
Now, there are 2 questions that both HZNP and DEPO shareholders are speculating.
1- What will be the cash offer price? DEPO is going up since shareholders are thinking $28 but it depends. It is not July anymore and cash offer will be smaller may be around $25.
2- HZNP shareholders are worry because of dilution. These are mostly traders and short term players. The cash from issued shares goes to acquisition and the price of issued shares will be above $25.
I think .95x still applies. That means if HZNP issues shares at $26.40 then it offers DEPO with $25 per share. Higher the price of issued shares, higher the offer for DEPO shares where .95x will be met.
Anytime a company talks about issuing some shares, it goes down since shareholders think of dilution. In HZNP case, it is a different story. Some companies issue shares because they need money to survive. In HZNP, the shares are issued to grow the company thru acquisition. One important note is that HZNP knows that current prices came along because of noises but fundamentals are strong and the company deserves much higher evaluation. So new shares will be issued at much higher than current prices, something close to previous bond prices at minimum.
This HZNO action will have 3 purposes: 1) It pushes current PPS much higher, way above DEPO PPS. 2)HZNP will have cash ready to buy either DEPO shares or offer cash for acquisition. 3)If DEPO acquisition is not pursued then HZNP will have a plenty of options with its cash to acquire other drugs or companies.
This biotech correction has changed some metric related to the acquisition. In one hand, .95x conversion seems to be a negative for HZNP but a few other factors worked against DEPO. DEPO shares are cheap and new investors can buy them as much as they can before the deal.
If DEPO current price is around $19, then 26% premium puts it at $24, a price that makes many new DEPO shareholders happy. HZNP can pay that price with cash. I am sure that HZNP can find investors who are will to provide the money at reasonable interest rate since new DEPO business can be used as a clitoral.
Don't worry about current prices of both companies since they are in transition and the price will be adjusted soon after this uncertainty is solved.
About 27m shares of DEPO were traded under $20 and 35m under $24 since biotech correction. At least 20m of those shares(1/3 of outstanding shares) switched to new shareholders and they will be happy with any price above $22. HZNP can provide this price very easily.
In addition, institutional investors have long term view plus safety and diversification. A combined companies will have higher growth, higher safety and excellent diversification.
I believe that over 80% DEPO shareholders are willing to close the deal today.
Don't worry about HZNP shares at this time, it will catch up eventually.
HZNP is a small company that is hiring and helping economy while helping patients who cannot afford to pay.
HZNP as a growing small company should be loved by both political parties.
Obviously, HZNP has lined up something financially and it also negotiated something with a few third parties which at the end both, HZNP gets what it wanted and also third parties get their gains.
So, the way I see it, the third parties buy DEPO shares now at discounted prices as much as possible and then sell them to HZNP with 15% to 25% higher. Third parties gets their gain, almost risk free and HZNP gets a reasonable price, much less than what it could get before.
The same third parties vote for the deal and that is a big plan for both third parties and HZNP.
We should know that HZNP has a plan, probably more than one plan, to pursue this acquisition. As some posters indicated, current prices may discourage shareholders of both companies for the deal.
The following may be HZNP plans especially with a financial advisor in their side as HZNP employee.
1- HZNP has lined up some loans to be able to pay most of DEPO price with cash, some with convertibles and some with its current cash and some with shares.
2- HZNP has made a deal with a few third parties so they can buy DEPO shares now at discounted prices and then sell them to HZNP at a fixed price (probably mid $20).
3- Who knows, but HZNP may start to buyback its own shares to push its PPS up then offers a convertible around $28.
Bottom line, HZNP will not be inactive and for sure is planning something. HZNP knows that its PPS has to go up to be able to do something and we will see this scenario by next 2 weeks.
And does not matter what will happen to DEPO acquisition, HZNP is grwing at very fast pace and it won't stay at these prices. New acquisitions will be announced in next 3 months.
One thing about HZNP stands up and is its unique marketing. You cannot find any small amd mid cap company with this type of marketing. That is why some small companies will join or even beg HZNP to help them to sell their products.
This is investing nature, and stock will have happy days and sad days.
However, HZNP fundamentals are strong and it is growing at very fast pace.
This is bump and soon HZNP will get over it. If you hold your shares until next year you will see your shares at much higher prices probably over 30% higher than current prices at minimum.
1- Increase sale and income.
2- A new good acquistion that adds to bottom line.
3- Drop DEPO and compete against it aggresively.
HZNP team has a few thikers and they will come up with a solution for thids problem soon.
Don't worry about current prices. This is not the first time that HZNP has been clipped.
When the DEPO price is down, all can buy either allies of DEPO or HZNP.
Allies are true allies when they buy at higher prices.
HZNP bought DEPO shares before the offer was annouced so they got them around $21 and they can exit with a little loss or if they hold, then they may make money too.
If HZNP cannot raise its stock price then it should quit pursing acquisition.
So, either call DEPO and say sorry for incovinience or raise the stock price to be attractive to DEPO shareholders.
It seems that HZNP covers all 3 above. It is expected to have a good Q3 and FA drug development is on schedule and also indicated that some M&A before year end.
Adding to above is HZNP low valuation at current prices.
The company is screaming for buy at these low prices. Those who are looking for better prices may miss but averaging is a sure way to get the best prices.