Pfizer's sweet $10B offer beats Novo Nordisk in bidding war for obesity biotech Metsera

Novo Nordisk's chief executive has challenged Pfizer to raise its bid if it is so eager to acquire obesity drug developer Metsera. Pfizer did the same, offering $10 billion more than the Danish pharmaceutical giant was willing to pay for drug candidates and platform technologies that could pave the way for the next generation of obesity drugs. Metsera accepted Pfizer's sweet offer, ending a bidding war that was escalating into a lawsuit challenging the legality of the Novo deal structure and growing concerns from antitrust regulators about the risks associated with the proposed acquisition.

New York-based biotech Metsera said late Friday that Pfizer's board of directors believes Pfizer's revised offer is the best fit for shareholders from a financial value and certainty of completion of the deal. The Federal Trade Commission has approved Pfizer's acquisition of Metsera, but the deal still needs approval from Metsera shareholders. Metsera's special shareholders' meeting originally scheduled for November 13 will be held as planned, at which the Pfizer acquisition will be voted on. The companies expect to close the deal soon.

Novo Nordisk already has a strong position in the weight-loss drug market with its once-weekly injectable GLP-1 drug Wegovy, which along with Eli Lilly and Company's Zepbound is currently the best-selling obesity drug. Pfizer doesn't have an obesity drug on the market yet, and despite some promise in its pipeline, the pharmaceutical giant's most advanced weight loss drug has failed in clinical trials. The race is on to develop the next generation of obesity drugs, with advantages including less frequent dosing, lower manufacturing costs, oral formulations, and additional targets beyond GLP-1. Metsera ticked all those boxes when it went public earlier this year at $18 a share.

Pfizer's winning bid was $10 billion, or $86.25 per share. The financial terms break down to an upfront cash payment of $65.60 per share from Metsera, as well as a contingent value right (CVR) to pay an additional $20.65 per share in cash if the biotech achieves certain milestones. The Pfizer bid Metsera accepted in September was about $7.3 billion, with $4.9 billion in upfront payments and up to $2.4 billion in CVR payments.

Novo Nordisk reignited the bidding war late last month with a higher unsolicited bid. Pfizer filed a lawsuit alleging breach of contract. But a new bidding war prompted both companies to raise their offers. Pfizer's counteroffer is worth about $8.1 billion in total; Novo raised its offer to about $10 billion.

The improved Novo offers up to $86.20 per share, but the deal structure is unusual. The Danish pharmaceutical giant will purchase each Metsera share for $62.20 in cash in exchange for non-voting preferred stock representing half of the biotech company's shares. Ten days later, Metsera will declare a dividend of $62.20 per share to shareholders. These moves would occur even before the Federal Trade Commission approves the deal. Subject to regulatory approval, Metsera shareholders will receive a CVR of up to $24 per share, and Novo will acquire the remaining Metsera shares.

The deal structure is the same as what Novo proposed in its previous offer, but with more money attached. In a lawsuit filed last week in Delaware Chancery Court, Pfizer claimed Novo's proposed special dividend violated Delaware law. A separate lawsuit filed in federal court said obesity drug giant Novo Nordisk's acquisition of Metsera would violate antitrust laws.

Novo Nordisk CEO Mike Doustdar briefly discussed the matter during an Oval Office press conference on Thursday, with the main topic being making the GLP-1 drug available to Medicare and Medicaid recipients at lower prices. Asked about the bidding war with Pfizer, he said that as of that day, Novo Nordisk's bid was winning.

“Our message to Pfizer is that if they want to acquire this company, put your hands in your pocket and bid higher,” Dustdahl said. It's a free market and at the end of the day it's basically about what the seller sells for for their shareholders and what the buyer is willing to pay. This has nothing to do with the FTC or anything else. “

Still, there are signs the FTC is leaning toward Pfizer's stance. Metsera acknowledged there could be antitrust risks from regulators saying the company was moving forward with a deal structure proposed by Novo Nordisk. In a press release on Friday, Metsera said its board determined that Novo's takeover bid presented unacceptably high legal and regulatory risks to Metsera and its shareholders compared with the proposed merger with Pfizer, including the risk that the initial dividend may never be paid or that it may subsequently be challenged or withdrawn.

Novo Nordisk said in a separate statement on Saturday that it still believed the structure of its proposed deal complied with antitrust laws. But the company added that it would not increase its takeover bid for Metsera “in line with its commitment to financial discipline and shareholder value.” Even so, the metabolic drug giant's mergers and acquisitions are not over. Novo said it will continue to evaluate business development and acquisition opportunities.

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