NEW YORK (TheStreet) -- Shares of Allergan (AGN - Get Report) were falling in early-morning trade Tuesday after the pharmaceutical company agreed to buy Tobira Therapeutics (TBRA) for as much as $1.695 billion.
Allergan will pay $28.35 per share in cash, or up to $49.84 per share if Tobira hits certain development, regulatory and sales goals.
Tobira is a biopharmaceutical company developing therapies for non-alcoholic fatty liver disease.
If Tobira fails to meet contingency goals, the lower deal price still represents a roughly 500% premium over its closing price yesterday of $4.74 per share.
Allergan will gain Tobira's cenicriviroc and evogliptin drugs for the treatment of non-alcoholic steatohepatitis in the acquisition.
Brent Saunders, Dublin-based Allergan's CEO, said the deal with Tobira fills a "white space area" in its gastroenterology franchise, according to a company statement.
Shares of Tobira were soaring 657.28% to $35.90 on heavy trading volume Tuesday morning, with more than 875,000 shares traded vs. its 30-day average volume of about 400,000 shares.
(Allergan is held in Jim Cramer's charitable trust Action Alerts PLUS. See all of his holdings with a free trial.)
Separately, TheStreet Ratings objectively rated Allergan stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
TheStreet Ratings rated this stock as a "hold" with a ratings score of C.
The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and a generally disappointing performance in the stock itself.
You can view the full analysis from the report here: AGN