Amgen shares extend losses after all-cash deal for Horizon
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Amgen (NASDAQ:AMGN) shares traded lower for the fourth straight session on Tuesday after the pharma giant announced its biggest-ever acquisition in the form of an agreement to buy the Ireland-based biotech Horizon Therapeutics (NASDAQ:HZNP) for nearly $27.8B in cash.
The deal for rare-disease-focused Horizon (HZNP) marks the biggest pharma M&A transaction since AstraZeneca (AZN) agreed to pay $39B for Alexion Pharmaceuticals, a drug maker with a similar focus.
âThat Amgen is looking for larger deals is not surprising, given expected erosion of its base business,â Wolfe Research analyst Tim Anderson wrote after the agreement. âMost often it is companies with future holes to fill that do bigger deals,â the analyst added.
While expecting the new addition to improve its revenue and non-GAAP earnings per share from 2024, Amgen (AMGN) opted to keep its 2022 and 2030 guidance unchanged despite a potential closure of the deal in H1 2023.
However, indicating plans to retire $10B of debt by 2025, the management ruled out balance sheet concerns post-acquisition.
Meanwhile, Wells Fargo reaffirmed its Equal Weight rating on the stock even as analysts led by Mohit Bansal said that the price the company agreed to pay for Horizon (HZNP) stood at the low end of its estimated range.
However, the team expects near-term revenue synergies given Amgenâs (AMGN) overseas reach and projects long-term value if the company can extend patent protection for Horizonâs (HZNP) top-selling drug Tepezza with a potential subcutaneous version of the infusion. 
Read: Seeking Alpha contributor ONeil Trader notes that the transaction is a âbargainâ for Amgen (AMGN) but indicates a suboptimal exit for Horizon shareholders.