Jazz To Acquire Cannabinoid Drug Company GW Pharma For $7.2B

In the first big-ticket biopharma M&A of the year, Jazz Pharmaceuticals PLC JAZZ announced a deal to buy cannabinoid drug company GW Pharmaceuticals PLC- ADR GWPH.

The Jazz-GW Pharma Deal: Jazz announced a definitive agreement to buy GW Pharma for a total consideration of $220 per ADS in cash and stock, with $200 in cash and $20 in Jazz shares. The per-share value represents about 50.4% premium over the $146.25 per share at which GW Pharma closed Tuesday.

Total consideration would be $7.2 billion, or $6.7 billion, net of GW Pharma's cash. The deal has been unanimously approved by boards of both companies.

Jazz expects to fund the cash portion of the deal through a combination of cash on hand and debt financing. The company said it has obtained fully committed debt financing from BofA Securities and JPMorgan Securities.

The closing of the deal is subject to approval by GW Pharma shareholders, sanction by the High Court of Justice of England and Wales and other customary closing conditions. The transaction is expected to close in the second quarter of 2021.

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The Jazz-GW Pharma Deal Logic: Upon close of the transaction, the combined company will be a leader in neuroscience with a global commercial and operational footprint, Jazz said in the statement.

The deal is expected to add a third high-growth commercial franchise for Jazz.

"Jazz is proud of our leadership position in sleep medicines and rapidly growing oncology business. We are excited to add GW's industry-leading cannabinoid platform, innovative pipeline and products, which will strengthen and broaden our neuroscience portfolio, further diversify our revenue and drive sustainable, long-term value creation opportunities," said Bruce Cozadd, CEO of Jazz.

GW Pharma's lead product, plant-derived Epidiolex oral solution, is approved in patients one-year and older for the treatment of seizures associated with Lennox-Gastaut Syndrome, Dravet Syndrome and Tuberous Sclerosis Complex.

This product has also been approved, in Europe under the tradename Epidiolex in patients two years of age and older for the adjunctive treatment of seizures associated with LGS and Dravet syndrome in conjunction with clobazam.

Additionally, GW Pharma's pipeline includes Phase 3 asset nabiximols for treatment of spasticity associated with multiple sclerosis and spinal cord injury, as well as earlier-stage cannabinoid product candidates for autism and schizophrenia.

The companies expect the combination to provide double-digit revenue growth and be accretive in the first full year of combined operations and substantially accretive thereafter.

In premarket trading, Jazz shares were slipping 4.63% to $150, while GW Pharma stock was jumping 47.01% to $215.