Why Patheon Shares Skyrocketed

Is this meaningful? Or just another movement?

| More on:
The Motley Fool
You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.

What: Shares of Patheon (TSX: PTI) soared 62% today after Dutch health care company Royal DSM partnered up with hedge fund JLL Partners to take the contract drug maker private.

So what: The all-cash deal values Patheon at $9.32 per share and represents a whopping 64% premium to yesterday’s close. Patheon is just the latest in a recent string of Canadian mid-cap health care companies to be taken private, suggesting that private equity firms and larger players see plenty of value in the space.

Now what: Patheon will be combined with DSM’s existing pharmaceutical products business, with the new entity expected to generate revenue of about $2 billion. “After a successful completion of the transaction, [the new company] will have an unmatched end-to-end offering from drug products to active substances,” said Royal DSM CFO Rolf-Dieter Schwalb in a conference call. So while Patheon shares are likely all popped out at this point, other mid-caps in the sector might be worth looking into for some healthy hidden value.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Brian Pacampara owns no position in any of the companies mentionedThe Motley Fool does not own any of the stocks mentioned at this time.

More on Investing

Payday ringed on a calendar
Dividend Stocks

How to Convert $500 Monthly Investment Into $200 Monthly Income

If you want the stock market to give you regular monthly income, you have to invest in the stock market…

Read more »

falling red arrow and lifting
Investing

RRSP Investors: 3 Dividend Stocks to Buy on the Dip

Inflation has delayed retirement for Canadians. RRSP investors should buy cheap dividend stocks like Fortis Inc. (TSX:FTS)(NYSE:FTS).

Read more »

Growth from coins
Tech Stocks

Got $1,000? Buy These 3 Under-$20 Growth Stocks to Earn Higher Returns

These under-$20 growth stocks can deliver solid returns in the long run.

Read more »

worry concern
Dividend Stocks

3 Ultra-Safe Dividend Stocks for Jittery Investors

Motley Fool investors nervous about the market downturn should consider these ultra-safe dividend stocks that keep paying passive income no…

Read more »

Economic Turbulence
Cryptocurrency

The TSX’s 1st Crypto ETF Lost $500 Million in 1 Day

The TSX’s first crypto ETF lost $500 million is one day and is down nearly 58% year to date.

Read more »

House Key And Keychain On Wooden Table
Dividend Stocks

Is the Real Estate Boom Finally at an End?

It might be hard to believe, but Canada’s decades-long housing boom might be at an end.

Read more »

stock analysis
Investing

RRSP Investors: 2 Oversold TSX Financial Stocks to Buy for Total Returns

Top TSX financial stocks look oversold right now for RRSP investors seeking attractive dividends and total returns.

Read more »

Investing

Got $500? 3 Undervalued TSX Stocks for Superior Returns

These undervalued stocks have strong potential for growth and will likely generate superior returns in the long term.

Read more »