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Pernix Therapeutics Holdings Inc (NASDAQ:PTX): Is The Buyout Finally Just Around The Corner?

Pernix Therapeutics Holdings Inc (NASDAQ:PTX): Is The Buyout Finally Just Around The Corner?
Written by
Chris Sandburg
Published on
April 24, 2017
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We’ve been highlighting Pernix Therapeutics Holdings Inc (NASDAQ:PTX) as a potential buyout candidate for some time now. Since Sedor took over as interim Chief in May last year, and was subsequently appointed as permanent to the role a few months later, the suggestion that the company is (and has been) dressing itself up for a buyout has been very real.As yet, however, it's not happened.We've seen some hints, and actions taken that seem to point towards a buyout as a logical near term conclusion. We’ve also had certain statements from management (on calls, as part of written communication and in filings) that indicate a buyout could be on the cards; but nothing concrete.At the end of last week, the company filed an 8K with the SEC, detailing the amendment of (or perhaps more accurately, a spate of amendments to) a Wells Fargo credit agreement. Yet again, the amendment is littered with hints at a near term buyout, and it finally looks as though wider markets are coming round to our suggestion that this company is poised to announce its fielding of an offer, or offers.We won't go into too much detail on the filing itself – readers looking to get clued in on the specific amendments can check it out here.A couple of the standout elements, however, detail the potential on-boarding of an investment banker to assist the company "with the marketing, negotiation, documentation and consummation of an Acceptable Sale" as well as certain terms regarding the meeting of obligations associated with the credit agreement, in the event of an acquisition of Pernix's assets.All of the speculation that this filing has brought with it is having an impact on the company's share price. Pernix closed out the session on Thursday last week for around $3.30 a share. Shortly after the bell on Friday morning, the company traded for a little over $4.60 – a nearly 40% run on the back of the filing, and the subsequent interpretation.The company settled to close out the week at $3.71, but is up a further 7% pre market on Monday, and will open the week at almost $4 a piece.So what's next?Well, as we concluded in our most recent coverage of Pernix, we're looking for any announcement from management related to a buyout as the next major catalyst. Shareholders are looking for a substantial premium on current prices – some figures are as high as $30 a piece, but that seems optimistic to us. That said, if there is a buyout announcement, there is the potential for a reasonable premium; this is a company that has been beaten down on sentiment more than anything else over the last twelve months, and its assets remain potentially very valuable to a larger suitor that can support them the capital necessary to get them on shelves.It's worth pointing out that – yet again – this action is rooted in speculation, and nothing more. Sure, said speculation is based on conclusions drawn from filings and management communication, but interpretations can be misinformed, and if we don't see any sort of acquisition announcement within, say, the next 60 days, chances are this one will take a hit as markets sell the fact.That said, we're of the opinion that, while there's not much to go on, there's enough to validate the suggestion that a buyout might be on the cards as a reasonable assumption, and this makes Pernix very much worth keeping an eye on near term. As we've said, the $30 a share that some investors are hoping for might be wildly over-optimistic, but even a conservative estimate puts a double digit premium on the table, and after a rocky first quarter, said premium would be a welcome reprieve for long term holders.We will be updating our subscribers as soon as we know more. For the latest updates on PTX, sign up below!Disclosure: We have no position in PTX and have not been compensated for this article.

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