Eli Lilly & Co. just announced that they are going to buy Sigilon Therapeutics for $14.92 per share. Why are they buying it for a much higher share price than through the stock exchange where the closed quote was $3.93 per share?
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You need to pay a premium to the publicly traded price to take control. The board makes these decisions on behalf of the shareholders.
You can imagine if they tried to buy these shares directly on the market, shareholders would demand more as it was clear the demand was increasing. So this is the price that the board believes the vast majority of shareholders would be happy.
It’s also quite common in these pharmaceutical deals that the company lacks the cash to get their products to the market. So the share price gets really depressed. Then, a company with deep pockets can take a chance on it. And have infrastructure to make it happen efficiently.
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