Jazz Pharmaceuticals Surges On Analyst's Praise Of Takeover Plans

| About: Jazz Pharmaceuticals, (JAZZ)
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Jazz Pharmaceuticals Inc. (NASDAQ:JAZZ) announced plans after-hours Monday to take over privately held Irish biotech Azur Pharma Ltd. in an all-stock transaction, adding new revenue and an international platform. An analyst at Jefferies praised the deal and JAZZ stock closed 7% higher in response.

The takeover will create Jazz Pharmaceuticals plc, which will have Azur Pharma’s ten US-marketed specialty pharmaceutical products from the central nervous system and women’s health areas. Azur is expected to have net sales of $95-100 million for this year, according to the company’s news release.

Jazz Pharmaceuticals reported 2010 revenue of $173.8 million, 82% of which came from sales of narcolepsy drug Xyrem, according to Bloomberg. The companies expect Jazz Pharmaceuticals plc to have sales exceeding $475 million in the year following closure of the deal. According to the news release, “the company would also have a strong balance sheet, with no debt and approximately $250 million in cash expected at closing.”

Jefferies analyst Corey Davis hailed the deal, saying it should turn its expected cash flow growth into a “geyser,” according to The Associated Press. The research note also said the new company would benefit from Ireland’s lower tax rates. Davis raised his target price for JAZZ from $52 to $56.

Do you think Jazz Pharmaceuticals plc will live up to the market’s hope? For a deeper look into JAZZ, we crunched some numbers on the stock:

(Click chart for more detail)

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.