NEW YORK (TheStreet) -- Shares of WuXi PharmaTech (WX were gaining 5.4% to $43.54 on heavy trading volume Friday after the pharmaceutical research and development platform company received a buyout proposal worth about $3.3 billion from New WuXi Life Science.
As part of the proposal, New WuXi Life Science will pay $46 per American Depositary Share of WuXi PharmaTech. The offer represents a 16.5% premium over the company's April 29 closing price of $39.50, and an 18.9% and 20.1% premium over the company's 30-day and 60-day volume weighted average price before April 29, respectively.
WuXi PharmaTech previously received a "going private" offer on April 30.
Following the merger with New Wuxi Life Science the combined company will be owned by a consortium of Ally Bridge Group Capital Partners, Boyu Capital, Temasek Life Sciences, Ping An Insurance, and Hillhouse Fund II. WuXi PharmaTech chairman and CEO Dr. Ge Li will roll-over his interest in the company following the merger.
About 2.3 million shares of WuXi PharmaTech were traded by 10:45 a.m. Friday, above the company's average trading volume of about 583,000 shares a day.
TheStreet Ratings team rates WUXI PHARMATECH (CAYMAN)-ADR as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate WUXI PHARMATECH (CAYMAN)-ADR (WX) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, solid stock price performance and growth in earnings per share. We feel its strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 5.5%. Since the same quarter one year prior, revenues rose by 22.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The current debt-to-equity ratio, 0.30, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, WX has a quick ratio of 2.04, which demonstrates the ability of the company to cover short-term liquidity needs.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 30.70% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, WX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- WUXI PHARMATECH (CAYMAN)-ADR's earnings per share improvement from the most recent quarter was slightly positive. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, WUXI PHARMATECH (CAYMAN)-ADR reported lower earnings of $1.56 versus $1.58 in the prior year. This year, the market expects an improvement in earnings ($1.76 versus $1.56).
- You can view the full analysis from the report here: WX Ratings Report