Shares of Medivation (MDVN) jumped more than 12% Thursday morning in premarket trading, off news of that the drugmaker may be in talks with M&A advisers as subject of a takeover.
As many on Wall Street look for discounts in a landscape of depressed pharma prices -- largely driven by a host of downward 2016 guidance revisions, most noteably at Valeant Pharmaceuticals (VRX) -- the San Francisco-based company was said to be in talks with JPMorgan (JPM) advisers to prepare for takeover offers, according to a postmarket Reuters report Wednesday.
Medivation's market cap has shrunk to a shadow of its former self over the past year, with shares down more than 43% in the past 12 months. This could appeal to cash-flush Big Pharma players looking for new growth opportunities.
Johnson & Johnson (JNJ) is an especially likely candidate in the M&A hunt, as Real Money reported. And CEO Alex Gorsky has said he's looking for ways to implement J&J's substantial liquidity reserves to build out the company's three chief business segments: consumer, medical devices and pharmaceuticals.
His ambitions will be aided by $38 billion in cash, which has risen 15% over the past year, as well as a manageable $20 billion debt load, which has been supported by a healthy income trajectory over the last several years, clocking in at $16.6 billion in 2015.