Why Medicis Pharmaceutical Shares Skyrocketed

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of dermatology products maker Medicis Pharmaceutical (NYS: MRX) soared 38% today after Canada's largest public drugmaker Valeant Pharmaceuticals (NYS: VRX) agreed to acquire it for about $2.6 billion.

So what: The deal values Medicis at $44 per share and represents a whopping 39% premium to its closing price on Friday. Valeant is making the move to expand its presence in the skin care industry, and judging by its own stock's 15% pop today, Mr. Market seems quite pleased with the price it's paying to do it.

Now what: The transaction, which is expected to close in the first half of 2013, will create the dominant company in the U.S. dermatology space: Medicis led the market in sales last year, and Valeant was third. "The acquisition of Medicis represents a significant next step in our journey to become the leader in dermatology by strengthening Valeant's presence in acne, actinic keratosis, aesthetic injectables and anti-virals, among others," said Valeant CEO Michael Pearson. So while Medicis shares might be all popped out, Valeant's increasing scale in the skin care industry might be a source of market-topping returns going forward.

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The article Why Medicis Pharmaceutical Shares Skyrocketed originally appeared on Fool.com.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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