The pharmaceutical firm has signed a merger agreement with AytuBioScience. Aytu will purchase Neos for $44.9 million.
Shares of Neos Therapeutics, Inc. (NEOS) escalated with a heavy volume on Thursday following the merger deal with AytuBioScience, Inc. (AYTU),as AYTU also soared on the partnership agreement.
The focus of both the biosciences companies is to maximize profitability. Neos shares kicked off the trading at $0.90 up from the prior close of $0.55. NEOS stock traded at the day’s high of $1.20 surging over 100%. The stock closed the session at $0.81 up by almost 50%.
The investors were driven by this pharmaceutical deal seeing the potential of the combined company. NEOS volume rallied up to 172 million from the average volume of 3.6 million.
AytuBioScience’s stock also went bullish after the merger announcement, closing the day at $8.13 up by 20%.
Under the definitive merger agreement, Neos will combine with Aytu as its wholly-owned subsidiary in an all-stock transaction. Upon the completion of the merger transaction, Neos stockholders will receive 0.1088 common stock shares of Aytu in place of each NEOS share held.
Based on the merger agreement, Neos shareholders are to own up to 30% of the fully diluted common shares of Aytu. The Texas-based pharmaceutical company will approximately obtain $44.9 million in an all-stock transaction. This amount is based on the 10-day average moving amount of Aytu.
The merger agreement has already been approved by the BoDs of both companies.
The core objective of this merger is to accelerate the combined progress of these pharmaceuticals. Aytu will add Neo’s well know multi-brand ADHD portfolio that will diversify its footprint in pediatrics. Moreover, it will also expand its market share in adjacent specialty care segments.
This partnership will also leverage the growth of Neos RxConnect for Aytu’s product line of best-in-class prescription therapeutics.
The CEO of Aytu BioScience, Josh Disbrow commented that this deal is truly transformative. The initial revenue will position the company to speed up its profitability and add diversification to its business.
Based on the pro-forma basis as of Sep. 30, 2020, the aggregate net revenue for the combined company is almost $100 million, becoming a specialized pharmaceutical company.
Neos has an approximately $8.5 billion market share of its multi-brand ADHD portfolio. As of Sep. 30, 2020, Neos obtained $57 million in revenues. The estimated annualized cost synergies of $15 million are expected to begin in 2022.
Moreover, Aytu’sstrategic plans are perfectly aligned with this merger which makes an excellent fit to expand its market plans. The company believes this will create a stronger shareholder value.
At we write this both Neos’s and Aytu’s shares are heavily trading in downward trend. The possible reason is that a global investor rights law firm, Halper Sadeh LL, has accused Neos Therapeutics’ BoDs for possibly breaching federal securities law or their fiduciary duties to shareholders.Halper is investigating this issue to find out what actually happened.