AMAG Pharma and Allos Thera to merge in $686 million stock deal; Express Scripts to buy Medco

US drugmakers AMAG Pharmaceuticals (Nasdaq: AMAG) and Allos Therapeutics (Nasdaq: ALTH) entered into a definitive merger agreement under which the companies will combine in an all-stock merger with a total equity value of around $686 million.

The news saw AMAG’s shares plunge 14% to $16.46, while Allos dipped 1%, with Adam Feurstein writing in The Street, saying this “might be the nuttiest, most nonsensical business combination in biotech history.” The only thing AMAG and Allos have in common is that they have largely failed initial efforts to sell their respective drugs, neither of which have anything to do with each other, he said.

The transaction, expected to close in the fourth quarter, is projected to result in annual cost savings synergies of between $55 million and $60 million, the majority of which to be realized in the first fiscal year after closing.