Shares of EQRx are set to soar as it announces its acquisition by clinical-stage oncology company, Revolution Medicines.
Market Response
In premarket trading, EQRx shares experienced a 20% jump after closing at $1.71 on Monday, marking a 30% decline for the year. On the other hand, Revolution Medicines saw a 1% decrease after closing at $26.25 on Monday, representing a 10% increase year-to-date.
Acquisition Terms
According to the agreement, Revolution Medicines will acquire EQRx through a stock purchase. The number of shares will be determined based on an exchange-ratio formula. This formula will consider approximately 7.7 million Revolution Medicines shares, as well as additional shares equivalent to $870 million divided by a price that represents a 6% discount to the five-day weighted average of Revolution Medicines' share price prior to the vote.
Shareholder Support and Expected Close
Both companies have announced that EQRx shareholders holding over 40% of voting shares have already agreed to support the deal. The acquisition is expected to be finalized by November.
EQRx's Business Reset
This acquisition comes after EQRx revealed its plans in May to refocus its business strategy on a streamlined organization and pipeline of therapies. The company aims to reduce cash burn and has $1.3 billion in cash, cash equivalents, and short-term investments. However, in the first quarter of this year, EQRx recorded a loss of $82.6 million.
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