(Nov 8): Pfizer Inc has agreed to buy Metsera Inc in a US$10 billion deal, following a tumultuous bidding war with Novo Nordisk A/S for the weight-loss drug start-up.
Metsera said late on Friday that Pfizer will pay up to US$86.25 a share, including US$65.60 a share in cash initially, plus potential additional payments of up to US$20.65 a share for hitting certain milestones.
The announcement puts Pfizer in position to cap a remarkable bidding war between two of the world’s biggest pharma companies, each eyeing Metsera as an antidote to larger problems plaguing their businesses.
Novo, which had made an unsolicited offer for Metsera in October, has been trying to keep up with rival Eli Lilly & Co and boost its languishing stock price, while Pfizer has been searching for a viable way into the red-hot obesity business after several false starts with weight-loss drugs.
The obesity drug market is expected to reach US$100 billion by 2030. Metsera has three obesity drugs in the early- to mid-stages of development, which include medicines that may have fewer side effects or last longer than existing drugs like Novo’s Wegovy.
That has triggered the interest of more than a half-dozen companies eager to gain a foothold in the booming weight-loss market with a second-generation obesity drug.
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In the end, it was the US government that played the biggest role in determining which company would prevail.
A purchase by Novo would have presented “unacceptably high legal and regulatory risks to Metsera and its stockholders” due to US antitrust concerns, Metsera said in a statement on Friday, noting a call from the US Federal Trade Commission (FTC) regarding potential risks from proceeding with the proposed Novo deal structure. For its part, Pfizer had already secured FTC clearance for its bid.
Metsera’s board has determined the new Pfizer bid is “the best transaction for shareholders, both from the perspective of value and certainty of closing”. Novo didn’t immediately respond to a request for comment.
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In a statement, Pfizer said it is “pleased that we and Metsera have agreed to these revised terms, which will provide immediate and certain value to Metsera’s shareholders”. It said it expects to close the transaction shortly following the Metsera shareholder meeting on Nov 13.
Bloomberg News earlier on Friday reported that Pfizer had upped its bid, which came in five cents a share higher than the company’s previous bid.
Bidding war
Pfizer initially agreed to buy New York-based Metsera for US$70 a share in September, before Novo shocked Wall Street with a higher bid for the company. Pfizer, which failed to win a court order blocking Novo’s bid, raised its offer on Monday, only to have Novo better its proposal.
While Pfizer and Novo continued to up the ante, Metsera’s stock soared. Metsera’s shares have gained about 150% since before the original sale deal to Pfizer. The shares rose 2% to US$83.18 in New York trading on Friday, giving the company a market value of about US$8.75 billion.
In the Delaware Chancery Court, Pfizer had argued that the Novo’s offer violated the terms of its original agreement because it didn’t qualify as a “superior” proposal. A judge denied Pfizer’s request to temporarily block Novo’s bid. Pfizer also sued Novo on antitrust grounds in the Federal Court in Delaware in arguments Metsera called “nonsense”.
Pfizer’s saving grace came via the FTC, which raised concerns that Novo’s proposed bid “may violate the procedural provisions” of the law that requires a pre-merger review. The FTC has said it had no issues with Pfizer’s bid for Metsera.
Uploaded by Tham Yek Lee
