Roche Holding AG’s share price up, to acquire InterMune for $8.3 billion

Roche Holding AG, the biggest cancer drugs manufacturer in the world, announced an agreement was reached acquire InterMune Inc. for $8.3 billion, as the Swiss pharmaceutical giant seeks to further expand its portfolio.

“It’s a perfect fit from a portfolio point of view,” Severin Schwan, CEO of Roche, said. The deal “will allow Roche to grow and strengthen its pulmonary franchise globally.”

InterMunes top product is a so-called “orphan drug” for a rare lung-disease drug, itself an “orphan disease”, which affects about 200 000 people in the US and Europe each year. The “orphan” niches are considered lucrative, as the exclusivity of the market offer significant incentives, in addition to official support by many governments, including the US.

Roche is paying $74 per InterMune share, a 61% premium to the price before purchase-speculation surfaced mid-August, and 38% on top of InterMunes closing price as of Friday.

The all-cash purchase is the largest one of Roche since the Genentech takeover some five years ago, which cost the Swiss company $47bn. InterMunes acquisition is the fourth purchase by Roche this year, as the company responds to increasing investor pressure to put more of the companys cash in use.

2014 has been the busiest year for pharmaceutical companies so far, with about $87bn invested in M&A deals through June.

Roche Holding AG was 0.04% up to close at CHF 265.90 per share Friday, marking a one-year change of +10.38% and valuing the company at CHF 228.61bn (~$209.55bn). According to the Financial Times, the 24 analysts offering 12-month price targets for Roche Holding AG have a median target of CHF 290.00, with a high estimate of CHF 335.00 and a low estimate of CHF 251.00. The median estimate represents a 9.06% increase from the last price of CHF 265.90.