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Applied Genetic Tech (AGTC) Stock Soared 65% on Takeover Deal

Simon Mugo trader
Updated 24 Oct 2022

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Key points:

  • Applied Genetic Tech (AGTC) stock soared 64.7% on the takeover deal.
  • A subsidiary of Syncona Limited will acquire the company for $23.5 million.
  • Investors cheered the deal, which represents a significant premium.

The Applied Genetic Technologies Corp (NASDAQ: AGTC) stock price soared 64.7% after revealing that it had agreed to be acquired by a newly formed subsidiary of Syncona Limited (LON: SYNC) for an initial upfront cash payment of $23.5 million ($0.34 per share).

The cash paid represents a 42% premium to AGTC’s closing price on October 21, 2022. In addition, the lucrative deal will see Syncona pay up to $50 million ($0.73 per share) to AGTC shareholders based on contingent value rights (CVRs). The company’s board unanimously approved the sale transaction.

Also read: The Best Biotech Stocks Under $5 To Buy Right Now.

Applied Genetic Tech (AGTC) shareholders could receive future payments based on the clinical success of XLRP and other pipeline assets through CVRs. In addition, the deal will see a subsidiary of Syncona Limited initiate a tender offer to acquire all outstanding shares of AGTC common stock.

AGTC shareholders will also receive one non-tradeable CVR or each common share they hold at the completion time and will be eligible to receive additional payments of up to $50 million ($0.73 per share).

The total compensation to be received by shareholders could reach $1.07 per share, representing a 344% premium to Friday’s closing price.

Dr Scott Koenig, AGTC’s Chairman, said: “Our board and leadership team evaluated all alternative options to progress AGTC-501. Given the state of equity and other funding markets, we see significant challenges in funding ongoing operations beyond 2022. We believe that this transaction clearly will deliver the best value to our shareholders.   AGTC’s board of directors has unanimously approved the offer and strongly encourages shareholders to tender their shares.”

Sue Washer, AGTC President and CEO, said: “This transaction allows continued progress in advancing an important therapy for XLRP patients while also maximizing immediate and potential long-term value to our shareholders. On closing, AGTC will be Syncona’s third company focused on retinal gene therapy, and we look forward to transitioning AGTC-501 to Syncona’s experienced stewardship with the goal of advancing this differentiated product candidate to patients with XLRP.”

*This is not investment advice.

AGTC stock price.

Applied Genetic (AGTC) stock price 24-10-2022
Source: Tradingview

The Applied Genetic (AGTC) stock soared 64.72% to trade at $0.3955, rising from Friday’s closing price of $0.2401.

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading