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Pfizer Purchases Anacor in a $5.2 Billion Cash Deal

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Pfizer starts going after smaller targets

On May 16, 2016, Pfizer (PFE) announced that it was acquiring dermatology pharma company Anacor (ANAC) in a transaction valued at $5.2 billion—including cash and assumed debt. Pfizer will purchase Anacor through a cash tender offer for $99.25 per share. This is a 55% premium to pre-deal prices. This is Pfizer’s first deal after the transaction with Allergan (AGN) was terminated.

Anacor’s products include Kerydin and Crisaborole. Kerydin is a toenail fungus treatment. Crisaborole is a treatment for eczema. Crisaborole is still in the FDA testing phase. Crisaborole is the asset Pfizer is most interested in acquiring. The addressable market could be $2 billion per year.

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Comments on the merger

“We believe the acquisition of Anacor represents an attractive opportunity to address a significant unmet medical need for a large patient population with mild-to-moderate atopic dermatitis, which currently has few safe topical treatments available,” said Albert Bourla, group president of Pfizer’s Global Innovative Pharma and Global Vaccines, Oncology and Consumer Healthcare Businesses. “Crisaborole is a differentiated asset with compelling clinical data that, if approved, has the potential to be an important first-line treatment option for these patients and the physicians who treat them.”

Conditions

The following conditions have to be met for the deal to close:

  • minimum tender condition of 50%
  • Hart-Scott-Rodino Antitrust approval

Other merger arbitrage resources

Other important merger spread is the Cigna (CI)-Anthem (ANTM) deal. It’s slated to close in 2H15. For a primer on risk arbitrage investing, read Merger arbitrage must-knows: A key guide for investors.

Investors who are interested in trading in the healthcare sector should look at the S&P SPDR Healthcare ETF (XLV), the Vanguard Health Care ETF (VHT), or the iShares US Healthcare ETF (IYH).

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