Pfizer Inc. (NYSE: PFE) has announced its intentions to purchase biotech company Array BioPharma Inc. (NASDAQ: ARRY) in a deal worth $11.4 billion. Pfizer said it will use debt and cash reserves to make the purchase, which is expected to close in the second half of 2019. Shares of Array rose 60 percent in premarket trading on the purchase announcement, while shares of Pfizer were little changed.
Pfizer is paying a hefty premium for Array. The deal values Array stock at $48 per share, a 62 percent premium to the biotech company’s closing price on Friday. According to a statement from Pfizer, the transaction is expected to reduce adjusted earnings per share by between 4 and 5 cents this year and in 2020 and will add to earnings beginning 2022.
Array BioPharma develops small molecule medicines primarily to treat cancer. Array’s portfolio includes two approved cancer treatments and drugs in more than 30 clinical trials for different kinds of cancer. The company has an oral combination treatment for use in patients with melanoma and a triple combo therapy for colorectal cancer patients. In its most recent fiscal year, Array reported revenue of $174 million.
Pfizer is the second-largest U.S. pharmaceutical company by revenue, behind only Johnson & Johnson. In 2018, the company reported revenue of $53.6 billion. Under new Chief Executive Officer Albert Bourla, Pfizer has launched its “15 in 5” plan, in which it will launch 15 experimental treatments, each with at least $1 billion annual sales potential, over a five-year period. The acquisition of Array could help it reach this goal.