The CEO of Novo Nordisk issued a bold challenge to Pfizer, urging them to increase their bid if they truly desired to acquire the obesity drug developer Metsera. Taking the challenge to heart, Pfizer responded with an impressive $10 billion bid. This amount surpasses the offer from the Danish pharmaceutical powerhouse, aimed at securing drug candidates and platform technologies that are crucial for developing the next wave of obesity medications. Metsera accepted Pfizer’s enhanced offer, bringing an end to a bidding war that had escalated to potential lawsuits questioning the legality of Novo’s proposed deal structure, alongside growing scrutiny from antitrust regulators regarding the risks associated with Novo’s acquisition attempt.
The board of directors at Metsera concluded that Pfizer’s revised offer represents the best option for shareholders, both in terms of financial return and the reliability of deal completion. This decision was communicated by the New York-based biotech firm late Friday. Importantly, the Federal Trade Commission had already approved Pfizer’s acquisition of Metsera, but the transaction still requires approval from Metsera’s shareholders. A special shareholder meeting, previously scheduled for November 13, will proceed as planned to vote on the Pfizer acquisition, with both companies anticipating a swift closure of the transaction thereafter.
Novo Nordisk has established a solid foothold in the weight loss drug market through its weekly injectable GLP-1 medication, Wegovy. Currently, Wegovy, alongside Eli Lilly’s Zepbound, stands as one of the best-selling obesity treatments on the market. In contrast, Pfizer lacks any commercially available obesity drugs. While the pharmaceutical giant has several prospects under development, its most advanced weight loss drug candidates have not succeeded in clinical trials. The race to innovate next-generation obesity medications is intensifying, with a focus on benefits such as less frequent dosing, lower manufacturing costs, oral formulations, and targeting additional mechanisms beyond GLP-1. Metsera, which debuted publicly earlier this year at $18 per share, meets all these criteria.
Pfizer’s successful bid for Metsera may reach up to $10 billion, translating to a maximum of $86.25 per share. The financial breakdown includes an upfront cash payment of $65.60 for each Metsera share, alongside a contingent value right (CVR) that could provide an additional $20.65 per share if Metsera meets certain performance milestones. The initial bid accepted by Metsera from Pfizer in September was valued at approximately $7.3 billion, comprising $4.9 billion upfront and a CVR potentially worth up to $2.4 billion.
The bidding war reignited when Novo Nordisk launched a higher unsolicited offer late last month. In response, Pfizer filed a lawsuit alleging breach of contract. This competitive dynamic resulted in improved offers from both companies, with Pfizer’s counteroffer totaling around $8.1 billion in overall deal value, while Novo Nordisk increased its bid to approximately $10 billion.
The enhanced offer from Novo Nordisk reached up to $86.20 per share but involved an unconventional deal structure. The Danish pharmaceutical company proposed to pay $62.20 in cash for each Metsera share in exchange for non-voting preferred stock that would represent half of Metsera’s shares. Shortly thereafter, Metsera would issue a dividend of $62.20 per share to its shareholders, and these actions were planned to take place even before receiving FTC approval for the deal. Following regulatory clearance, Metsera shareholders would obtain a CVR potentially worth up to $24 per share, with Novo ultimately acquiring the remaining shares of Metsera.
This deal structure mirrors what Novo had proposed in previous offers, albeit with increased financial incentives. Pfizer’s recent lawsuit filed in the Delaware Court of Chancery alleges that Novo’s proposed special dividend violates Delaware state law. A separate federal suit claims that acquiring Metsera would infringe on antitrust laws, given Novo Nordisk’s substantial presence in the obesity medication space.
During a recent Oval Office press conference, where the primary discussion revolved around making GLP-1 medications more affordable for Medicare and Medicaid recipients, Novo Nordisk CEO Mike Doustdar briefly touched on the ongoing bidding conflict with Pfizer. When asked about the situation, he confidently stated that, as of that day, Novo’s bid was prevailing.
“Our message to Pfizer is that if they would like to buy the company, then put your hand in the pocket and bid higher,” Doustdar asserted. “It’s a free market, and ultimately, it comes down to the price that the seller is willing to accept for their shareholders and the buyer is prepared to pay. This situation is unrelated to the FTC or any other external factors.”
Despite this, indications surfaced suggesting that the FTC was leaning toward Pfizer’s perspective. Metsera acknowledged receiving communication from the regulator regarding the potential antitrust implications associated with proceeding with Novo Nordisk’s proposed deal structure. In a news release issued on Friday, Metsera’s board conveyed concerns that Novo’s offer posed “unacceptably high legal and regulatory risks” for both the company and its shareholders, particularly regarding the uncertainty of the initial dividend payment or the possibility of it being challenged or rescinded.
Although Novo Nordisk firmly believes that its proposed deal structure adheres to antitrust regulations, the company stated in a separate announcement that it would not increase its offer for Metsera, maintaining its commitment to financial discipline and shareholder value. Nevertheless, Novo is not stepping back from pursuing mergers and acquisitions; the company is actively evaluating various opportunities for business development and potential acquisitions.
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