Pfizer announced a $14 billion deal for Medivation, a biotech company that makes an important cancer drug.
Medivation’s portfolio includes Xtandi, a drug that treats prostate cancer. Pfizer said Xtandi generated approximately $2.2 billion in worldwide sales, and the purchase should add to its earnings per share immediately.
Pfizer will pay $81.50 in cash for each Medivation share, a 21% premium over Friday’s closing price. Medivation shares were already up nearly 40% so far this year. The deal still needs the approval of shareholders and regulators.
The drugmaker had a much bigger proposed $150 billion merger with Allergan essentially blocked earlier this year when the Obama administration issued new rules designed to crack down on corporate tax avoidance.
Pfizer had planned to use the merger to move its corporate headquarters to Ireland, and possibly reduce its tax bill, a move known as an inversion. The new rules issued by the U.S. Treasury changed how the ownership percentage of the foreign company is calculated and crack down on a tax strategy called “earnings stripping.”
The new rules are the reason Pfizer and Allergan scrapped that merger.
Some have suggested that the death of the Allergan deal could lead Pfizer to split up into smaller companies. But it has gone ahead with a couple of acquisitions since then, including a $5.2 billion purchase of Anacor, announced in May. Anacor’s prime product is a treatment for eczema.