Marijuana stocks jumped on Wednesday after the news that Jazz Pharmaceuticals (JAZZ) - Get Jazz Pharmaceuticals Plc Report was buying cannabinoid-therapeutics company GW Pharmaceuticals (GWPH) - Get GW Pharmaceuticals PLC Sponsored ADR Report for $7.2 billion of cash and stock.
ETFMG Alternative Harvest ETF (MJ) - Get ETFMG Alternative Harvest ETF Report, the largest cannabis ETF, climbed 11%. GW surged 45%, Aphria (APHA) - Get Aphria Inc Report rose 14%, Tilray (TLRY) - Get Tilray, Inc. Report tacked on 15%, Cronos Group moved up (CRON) - Get Cronos Group Inc Report 9.4%, Aurora Cannabis advanced (ACB) - Get Aurora Cannabis Inc. Report 9.2%, and Canopy Growth (CGC) - Get Canopy Growth Corporation Report added 8.3%.
In addition to the merger, many pot investors are optimistic that the substance may be legalized at the federal level by a Democratic president and a Democratic Congress. That may be a pipedream, but the hope is there.
As for the merger, Jazz will pay $220 per American depositary share of U.K.-based GW Pharmaceuticals. The price consists of $200 cash and $20 in Jazz ordinary shares, the companies said in a statement. The deal is valued at $6.7 billion net of GW cash.
The transaction, which has been approved by the boards of both companies, is expected to close in the second quarter.
The deal will bolster the combined company’s efforts to develop, produce and commercialize regulator-approved therapeutics that address a range of diseases, including epilepsy-related seizures associated with Lennox-Gastaut syndrome, Dravet syndrome and tuberous sclerosis complex.
Jazz’s lead product, Epidiolex, is the first plant-derived cannabinoid medicine approved by the U.S. Food and Drug Administration to treat epilepsy-related seizures.
GW's cannabinoid platform, innovative pipeline and products "will strengthen and broaden our neuroscience portfolio, further diversify our revenue and drive sustainable, long-term value-creation opportunities," Jazz Chief Executive Bruce Cozadd said in a statement.