(Bloomberg) — Pfizer () agreed to buy Metsera for up to $10 billion, beating out Novo Nordisk in a fierce bidding race, after U.S. regulatory opposition thwarted the Danish drugmaker’s competing bid for the obesity drug startup.
Pfizer raised its offer to as much as $86.25 per share, matching a revised proposal from Novo on Nov. 6. The US company agreed to pay US$465.60 per share in cash and up to US$20.65 contingent on certain milestones, Metsera said in a statement on Friday.
Metsera cited a call from the US Federal Trade Commission (FTC) about potential risks related to the structure of Novo’s proposal. For its part, Pfizer had already obtained FTC approval for its offering.
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After “careful consideration”, Novo does not intend to increase its offer, the Danish company said in a statement on Saturday (8), adding that it believed the structure of the merger agreement was “in compliance with antitrust laws”.
Novo stated that it “will continue to evaluate opportunities for business development and acquisitions that meet its return and capital allocation criteria and that advance its strategic objectives.”
The purchase by Novo would have presented “unacceptably high legal and regulatory risks to Metsera and its shareholders” due to antitrust concerns in the US, Metsera said. Its board determined that Pfizer’s new offer was “the best transaction for shareholders, both from a value perspective and certainty of closing,” the target company said.
Pfizer expects to complete the transaction shortly after the Metsera shareholder meeting on November 13.
Bidding dispute
The deal ends a notable dispute between two of the world’s largest pharmaceutical companies, each seeing Metsera as a solution to larger problems affecting their businesses.
Novo, which made an unsolicited bid for Metsera in October, has been trying to catch up with rival Eli Lilly and boost its falling share price, while Pfizer looks for a viable way to enter the hot obesity market after several failed attempts with weight-loss drugs.
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Pfizer CEO Albert Bourla, an aggressive negotiator, doesn’t like to lose and has long wanted an obesity drug that could represent a big win and replace the declining sales of his Covid business. With patent expirations expected to cut sales by more than $15 billion by the end of the decade, he is under pressure to revamp Pfizer’s pipeline.
The company’s shares have fallen sharply since the height of the pandemic, and several attempts to develop obesity pills in Pfizer’s pipeline have failed in trials.
The Metsera deal is about winning the next generation of obesity drugs in a market expected to reach $100 billion by 2030. The next generation of drugs is expected to have the same or better efficacy as Lilly’s weekly Zepbound injection, but may be administered less frequently or have lower rates of nausea and vomiting. A laboratory that offers these incremental but practical improvements can capture a significant share of the market in the long term.
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Metsera, founded in 2022, has three drugs in early to mid-stage development, including drugs that may have fewer side effects or last longer than existing drugs like Novo’s Wegovy.
Pfizer initially agreed to buy New York-based Metsera for $70 a share in September, before Novo surprised Wall Street with a higher offer for the company. Pfizer, which failed to get a court order to block Novo’s offer, increased its bid on Monday, only for Novo to improve its offer.
As Pfizer and Novo continued to raise the stakes, Metsera shares soared. Metsera shares are up about 150% since before the original sale deal to Pfizer. On Friday, shares rose 2% to $83.18 on the New York Stock Exchange, giving the company a market value of about $8.75 billion.
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In the Delaware Court of Chancery, Pfizer argued that Novo’s offer violated the terms of the original agreement because it did not qualify as a “superior” proposal. A judge denied Pfizer’s request to temporarily block Novo’s bid. Pfizer also sued Novo over antitrust issues in federal court in Delaware, in arguments that Metsera called “absurd.”
Bloomberg News reported on Friday that Pfizer had increased its offer, which was 5 cents per share above the company’s previous proposal. The announced price of $86.25 per share represents a 159% premium to the $33.32 that Metsera shares closed at on the last trading day before the Pfizer deal was announced on September 22.
Pfizer’s salvation came through the FTC, which raised concerns that Novo’s proposed offer “may violate the procedural provisions” of the law requiring a pre-merger review. The FTC said it had no problems with Pfizer’s bid for Metsera.
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