What’s Next For XenoPort, Inc. (NASDAQ: XNPT) Shareholders?


XenoPort, Inc. (NASDAQ: XNPT) is being acquired by privately-held Arbor Pharmaceuticals for a sum of about $467 million in cash. Some analysts thought XenoPort could command a higher price, but the $7.03 per share price it is being offered is still a decent premium of 60% over the closing price immediately before the buyout deal was made public. The question many analysts are asking is whether Arbor will take XenoPort private.

Neither officials of XenoPort, Inc. (NASDAQ: XNPT) nor those at Arbor have been willing to discuss the fate XenoPort after the transaction. But some analysts are speculating that XenoPort could de-list.

60% premium and 100% return

The $7.03 price XenoPort is being offered by Arbor is 60% higher than the stock’s price on the closing day before the deal was announced. The transaction values XenoPort at about $467 million.

For investors who have held shares of XenoPort for the last one year, the deal would see the reap 100% return on their investment.  

Good but not the best for XenoPort, Inc. (NASDAQ: XNPT)

The $467 million valuation of XenoPort, Inc. (NASDAQ: XNPT) is a good price, but some analysts believe that the company would have commanded a better price if not for its recent struggles and bloated cost structure. In any case, the price it is being offered by Arbor should be appreciated because it reflects the success of its cost-cutting efforts.

The fact that XenoPort spends about $40 million annually on research and sales seems to explain its low purchase price.

Industry consolidation

The takeover of XenoPort by Arbor continues the trend of consolidation in the pharmaceutical space. Before Arbor stepped in, analysts speculated that XenoPort could be acquired by Dr. Reddy’s Laboratories (RDY). The companies recently entered into a licensing agreement that unlocked $47.5 million upfront for XenoPort.

Other biotech buyout targets

Now that XenoPort, Inc. (NASDAQ: XNPT) has been swallowed, the spotlight shifts to Neurocrine Biosciences, Inc. (NASDAQ: NBIX) and Alder Biopharmaceuticals Inc (NASDAQ: ALDR) as other biotech buyout candidates.


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