Pfizer has acquired this obesity drug maker for $10B
What's the story
Pfizer has won the bidding war for obesity drug developer Metsera, accepting its $10 billion acquisition offer. The deal comes after a strategic tussle with Novo Nordisk, which had made an unsolicited offer last week. The move is part of Pfizer's strategy to enter the lucrative weight-loss market and recover from past failures in developing such drugs in-house.
Offer specifics
Pfizer's offer includes cash payment and potential milestone payments
Pfizer's acquisition offer for Metsera is $86.25 per share, a 3.69% premium over Metsera's closing price on Friday. The deal includes an initial cash payment of $65.60 per share, and a contingent value right that could provide additional payments of up to $20.65 per share based on certain milestones being met. The news has sent Metsera's shares surging nearly 60% in the last week, raising its market value to $8.75 billion.
Bid implications
Novo Nordisk's unsolicited offer raises questions
Novo Nordisk's unsolicited offer for Metsera has raised questions about its future course of action. The company is trying to regain its lost ground in obesity drugs, previously dominated by Eli Lilly. However, Metsera has expressed concerns over Novo's proposal, citing "unacceptably high legal and regulatory risks." This comes after the US Federal Trade Commission (FTC) warned that their proposed deal could violate US antitrust laws.
Strategic move
Bernstein analyst highlights risks in Metsera acquisition
Pfizer has expressed its satisfaction with the revised agreement with Metsera and hopes to finalize the merger soon after Metsera's shareholder meeting on November 13. However, Bernstein analyst Courtney Breen has raised concerns over the $10 billion price tag, saying it is based on optimistic assumptions about Metsera's future performance. She also pointed out skepticism around long-term GLP-1 pricing, which could affect profit margins.
Board recommendation
Metsera board recommends shareholders approve Pfizer offer
Despite the concerns, Metsera's board has recommended its shareholders to approve the revised Pfizer offer. The biotech company is currently operating at a loss and analysts expect further losses as its drugs are still in development. The bidding war between Pfizer and Novo has significantly increased the acquisition price from Pfizer's initial $7.3 billion offer in September to today's figure.