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What Does the Aerie Buyout Mean for Alcon (NYSE:ALC)?

Story Highlights

To strengthen its footprint in the ophthalmic pharmaceuticals eye drops space, Swiss eye-care company Alcon has signed an agreement to buy Aerie Pharmaceuticals.

Swiss eye-care company Alcon (NYSE:ALC) has signed a definitive merger agreement to acquire Aerie Pharmaceuticals, Inc. (NASDAQ:AERI) for roughly $770 million. The deal, which is expected to boost Alcon’s financials, is in sync with its initiatives to expand its ophthalmic pharmaceutical offerings.

Through this transaction, Aerie’s Rocklatan, Rhopressa and AR-15512 will become a part of Alcon’s portfolio. Notably, AR-15512 is currently a Phase 3 product candidate for treating dry eye disease.

Further, Aerie’s pipeline of drugs, comprising multiple clinical and preclinical ophthalmic pharmaceutical product candidates, will also come under Alcon post the deal.

Coming to the financial terms of the deal, Alcon is acquiring at a price of $15.25 per share of Aerie. In comparison to Aerie’s last closing price of $11.15 on August 22, Alcon has quoted a premium of 37%. Subject to customary closing conditions, the deal is expected to close in the fourth quarter of 2022.

Is Alcon Stock a Buy, Sell, or Hold?

While analysts look cautiously optimistic, financial bloggers are 100% Bullish on ALC stock. On TipRanks, the stock has a Moderate Buy consensus rating based on five Buys, five Holds, and one Sell.

ALC’s average price target of $77.92 implies 13.8% upside potential. Shares of the company have declined 21.8% so far in 2022.

Final Thoughts

There is no denying that the addition of Aerie’s products will help Alcon bolster its presence in the ophthalmic pharmaceuticals and glaucoma space. In fact, Aerie estimates $130-140 million in total glaucoma franchise net product revenue for full-year 2022. Further, Alcon expects the deal to be accretive to its core diluted earnings in 2024.

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