German biotechnology company BioNTech (BNTX) is expanding its cancer research with a $1.25 billion all-stock acquisition of CureVac (CVAC).
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The deal is expected to enhance BioNTech’s mRNA capabilities and deepen its oncology (cancer) treatment pipeline. Following the announcement on June 12, CVAC stock soared more than 30%, while BNTX was up about 1%.
Under the agreement, CureVac shareholders will receive around $5.46 in BioNTech stock for each CureVac share they own, a 34% premium over CureVac’s June 11 closing price. The deal also includes a collar mechanism, which limits the number of BioNTech shares to be exchanged if the price moves beyond specified levels in the five days leading up to the closing.
Both companies’ boards of directors have approved the transaction.
Long-Term Play
The deal also marks an exit for the German government, which acquired a 13.3% stake in CureVac during the pandemic. It will now receive approximately $163 million worth of BioNTech shares as part of the transaction. BioNTech noted that Germany’s government supports the deal.
BioNTech said the move is designed to enhance its strengths across the entire value chain, from research and development and manufacturing to the commercialization of experimental mRNA-based cancer therapies. The deal also marks the end of a long-standing rivalry between the two firms, which intensified during the global race to create a COVID-19 vaccine.
Is BioNTech a Good Stock to Buy?
On TipRanks, BNTX stock has a consensus Moderate Buy rating among 19 Wall Street analysts. That rating is based on 14 Buys and five Holds assigned in the last three months. The average BioNTech stock price target of $139.91 implies a 33% upside from current levels.
