Sciele Target the Buyout Price

On September 1, Sciele Pharma, Inc. (SCRX) entered into a definitive agreement with Japanese company Shionogi for $1.4 billion, or $31 per share. The offer price represents a huge 61% premium over Sciele’s closing price on August 29. Sciele s shares shot up 59% following the takeover announcement. We previously had a Buy rating on Sciele but are now moving back to a Hold rating.

We believe that Sciele has done a good job saving the Sular franchise from generic erosion. In our opinion, Sciele’s strong sales and marketing experience and solid late-stage pipeline should help Shionogi strengthen its presence in the U.S. market once the acquisition goes through in the fourth quarter of 2008.

Our new target price on Sciele is $31, which is based on Shionogi’s offer price. The transaction has been approved by the Board of Directors of both companies and is expected to close in the fourth quarter.

Arpita Dutt, CA, contributed to the report.

Read the full analyst report on SCRX

Read the full analyst report on SCRX