Bristol Myers Squibb Scoops Up Schizophrenia Player Karuna Therapeutics In Massive $14B Deal
Portfolio Pulse from Vandana Singh
Bristol Myers Squibb & Co (NYSE:BMY) has agreed to acquire Karuna Therapeutics Inc (NASDAQ:KRTX) for $330.00 per share, totaling $14 billion in equity value. Karuna's lead asset, KarXT, is an antipsychotic drug for schizophrenia and is under FDA review with a decision expected by September 26, 2024. KarXT is also being tested for other conditions, including Alzheimer's disease psychosis. The deal is anticipated to close in the first half of 2024 and is expected to be dilutive to Bristol Myers' non-GAAP EPS by $0.30 in 2024. KRTX shares surged 48.80% to $320.30, while BMY shares fell 0.41% to $51.05 in premarket trading.
December 22, 2023 | 2:19 pm
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POSITIVE IMPACT
Karuna Therapeutics' shares jumped 48.80% to $320.30 following the announcement of its acquisition by Bristol Myers Squibb for $330 per share, reflecting a positive market reaction to the deal.
Karuna Therapeutics' significant share price increase is a direct result of the acquisition announcement by Bristol Myers Squibb. The premium price of $330 per share offered by BMY represents a substantial value for KRTX shareholders, which is reflected in the stock's sharp rise. The market's reaction is typically positive for the company being acquired, especially when the offer is at a premium to the current trading price.
CONFIDENCE 90
IMPORTANCE 95
RELEVANCE 100
NEUTRAL IMPACT
Bristol Myers Squibb's acquisition of Karuna Therapeutics for $14 billion is expected to provide significant revenue opportunities with KarXT and expand its pipeline. The transaction is expected to dilute non-GAAP EPS by $0.30 in 2024.
The acquisition of Karuna Therapeutics is a strategic move for Bristol Myers Squibb to enhance its product portfolio, particularly in the psychiatric and neurological space. While the deal is expected to be dilutive to EPS in the short term, the long-term revenue potential from KarXT and other pipeline assets is likely to be viewed positively by investors. The slight dip in BMY's stock price in premarket trading reflects the mixed short-term financial impact and the anticipation of future growth.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 100