Shares of Medivation Inc. soared 19% in premarket trade Monday, after the developer of cancer treatments confirmed an agreement to be acquired by Pfizer Inc. in a deal valued at $14 billion. Under terms of the agreement, Pfizer will pay $81.50 in cash for each Medivation share outstanding, which represents a 21% premium to Friday's closing price, and is 20% above the record close of $67.78 reached on March 20, 2015. Pfizer expects the deal to add 5 cents a share to earnings in the first full year after closing, which is expected to occur in the third or fourth quarter of 2016. Pfizer expects to finance the deal with existing cash. "The addition of Medivation will strengthen Pfizer's innovative health business and accelerate its pathway to a leadership position in oncology, one of our key focus areas, which we believe will drive greater growth and scale of that business over the long-term," said Pfizer Chief Executive Ian Read. The Wall Street Journal had reported over the weekend that a deal was near. Pfizer's stock was still inactive in premarket trade. Medivation's stock had run up 39% year to date through Friday, while Pfizer's had climbed 8.4% and the Dow Jones Industrial Average had gained 6.5%.
Continue Reading Below
Copyright © 2016 MarketWatch, Inc.