Analysis: NPS Pharmaceuticals (NPSP) Buyout

Stock Ratings: 1 = buy at current stock prices, 2 = buy on a 5-10% dip in stock price, 3 = sell on a 5-10% increase in stock price, 4 = sell at current stock prices to raise cash.  Ratings are based upon 12-18 month outlook on stock direction and not necessarily related to moves I make due to financial positioning.

It was announced today that NPS Pharmaceuticals has agreed to terms to allow Shire PLC to buy them out in an all cash deal.  Shire will pay $5.2B or $46 per share for the acquisition. As I stated in my summary, NPSP has put themself up for sale earlier this week and bidding was to close on Friday.  There have been rumors regarding the potential sale since mid-December and this price is about $1Billion more than what has been getting rumored.  We will need to see how the market reacts tomorrow to see if/how people are speculating the stock.  I get the feeling there won't be other companies that try to come in for a bidding war - even if Natpara gets approved.  However, that chance does always exist.  

If you own the stock, congratulations!  You can sell your shares if the FDA approves Natpara and it makes the stock price jump above $46 somehow, but otherwise I'd just hold onto your shares and wait for the deal to close.  If you sell early, you may have to take the shares for less than $46.  A final option would be to sell for less than $46 so you can get your money earlier and put it to work somewhere else.  We'll likely hear either during the JP Morgan Healthcare conference or NPSP's 4th quarter earnings report as to when, roghly, the deal will close.