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The stock market has gotten locked in a holding pattern lately, and many investors anticipated that would likely continue on Monday. With the Federal Open Market Committee scheduled to meet on Tuesday and Wednesday to discuss monetary policy and a potential interest rate increase, market participants aren’t sure whether the central bank will slow its pace of monetary tightening or double down on its fight against inflation.
Yet in early trading Monday morning, futures on the Nasdaq Composite (^IXIC) moved slightly higher, and investors took heart in a couple of high-profile merger deals that showed that the business world still has an appetite for stocks it finds attractive. Below, you’ll learn more about what has Coupa Software (COUP 26.67%) and Horizon Therapeutics (HZNP 15.49%) leading the Nasdaq higher.
Shares of Coupa Software jumped 27% in premarket trading on Monday morning. The provider of software to help companies track and manage their corporate spending agreed to go private in a deal that investors had anticipated a few weeks ago.
Coupa announced that it had entered into a formal agreement with private equity investment company Thoma Bravo that values the software provider at $8 billion. Under the terms of the all-cash acquisition, Coupa shareholders will receive $81 per share. That’s 30% higher than Coupa’s closing stock price on Friday.
The move follows speculation about a possible merger in late November, with reports suggesting that private equity peer Vista Equity Partners might be the buyer. However, those early reports weren’t definitive and left open the possibility that Vista might not agree to a deal or that another investor might step forward with interest in buying Coupa.
For its part, Thoma Bravo believes that it can help Coupa accelerate its growth more effectively as a privately held company. Yet longtime investors in Coupa won’t necessarily be all that happy at the deal, given that the buyout price is less than a quarter of what the stock fetched at its peak in early 2021. That’s a trend that’s getting increasingly prevalent in the mergers and acquisitions arena, and investors in many other growth stocks should be aware of the possibility of opportunistic private equity institutions stepping in with their own offers.
Elsewhere, shares of Horizon Therapeutics got a 15% boost early Monday. The biotechnology company inked a deal with an industry giant, following through on reports from late November that it had started to discuss acquisition prospects with a number of potential buyers.
Horizon agreed to a deal under which biotech giant Amgen (AMGN -0.67%) will purchase the company at a valuation of $28.3 billion. Shareholders will receive $116.50 per share in cash for their Horizon stock, which is nearly 20% higher than where the shares closed on Friday afternoon.
The move comes less than two weeks after Horizon had confirmed preliminary discussions with a number of prospective suitors. Amgen was the first company named in the late-November press release, but Horizon said it was also discussing a possible buyout from Sanofi and the Janssen Global Services unit of Johnson & Johnson. That brought a big jump in Horizon’s share price, and the Amgen offer is actually 48% higher than where Horizon’s stock traded immediately before that preliminary announcement.
Amgen believes it will be able to market Horizon’s approved treatments more effectively to serve a broader patient base, and it sees a highly complementary portfolio of candidate treatments in Horizon’s pipeline. Amgen’s stock fell 2% after the announcement, but given the need among biopharmaceutical companies to keep growing, the Horizon acquisition is consistent with what’s happening more broadly throughout the industry.
Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Coupa Software. The Motley Fool recommends Amgen and Johnson & Johnson. The Motley Fool has a disclosure policy.
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