Pressure from the FTC and Pfizer is building around Novo Nordisk’s bid to snatch obesity biotech Metsera: The antitrust watchdog has spotted issues with the structure of Novo’s bid, while its New York-based rival has put more money on the table.
Novo Nordisk’s attempt to steal Metsera from Pfizer may be in violation of U.S. merger procedure—just as Pfizer matched the Danish pharma’s $10 billion offer and likely clinched the prize.
In a letter sent Wednesday to lawyers for Novo and Metsera, the Federal Trade Commission (FTC) took particular issue with the Danish pharma’s offer to front a large amount of cash to acquire half of the biotech’s stock—a move the federal watchdog said could reduce Metsera’s “incentive to continue its development efforts to bring its pharmaceutical products to market.”
Such a deal structure, the letter contended, may violate the Hart-Scott-Rodino (HSR) Premerger Notification Act, which requires companies looking to combine their businesses to first secure FTC clearance. The act then requires a waiting period before parties can consummate the transaction. Novo’s restructured offer, according to the agency, flouts these requirements.
“Firms cannot evade HSR review by disaggregating an acquisition into multiple steps and deferring the HSR filing to the end, after potentially anticompetitive harms have already occurred,” the FTC wrote.
In its letter, the federal agency nevertheless maintained that it has “not made any determination on the merits” of the acquisition and its potential violations of the HSR Act. “Nor has the Commission and its staff considered at all the competitive effects of the proposed transaction.” Instead, the letter is meant to “encourage Novo Nordisk and Metsera” to work with the FTC and abide by its policies before taking any steps toward closing the transaction.
Meanwhile, Pfizer has answered Novo’s most recent bid that offered $10 billion for Metsera after a Delaware court declined to intervene and stop Metsera from terminating the original merger agreement.
“Given Pfizer has already received FTC clearance, we believe this to be a superior offer, all else being equal,” BMO Capital Markets analysts wrote on Thursday morning. “While Pfizer was unsuccessful in obtaining a temporary restraining order, this move could be a signal of an end to the bidding war.”
The high-profile bidding war over Metsera broke out last week when Novo filed an unsolicited $8.5 billion offer to acquire the biotech. Pfizer in September put $4.9 billion on the line in its own acquisition deal—a proposal that Metsera had accepted. The biotech was taken with Novo’s heftier offer, however, announcing last week that the Danish pharma’s proposal was “superior.”
Pfizer revised its offer, but Novo topped it again with a $10 billion bid.
Pfizer also filed litigation against Metsera and Novo, alleging an “anticompetitive conspiracy,” insisting that Novo’s bid cannot be considered a superior alternative to Pfizer’s because it “uses an unprecedented structure designed to deliberately evade antitrust review.” Metsera has promised to fight the lawsuit, noting that “Pfizer is trying to litigate its way into buying Metsera for a lower price.”
The courts answered on Wednesday afternoon, declining to step in.
For Novo and Pfizer, the battle for Metsera has drummed up skepticism from analysts. During Novo’s third quarter earnings call on Wednesday, executives were hounded with questions about the strategic fit that Metsera’s pipeline would have with its own, with one analyst even asking whether Novo had lost faith in its own assets.
“I think we have a fantastic pipeline. But when you have an ambition to go to hundreds of millions of people and treat them, then no pipeline is broad enough,” Novo CEO Maziar Mike Doustdar said in response.
Now that Pfizer has matched Novo, BMO believes the week-long battle has come to an end, and that the Pfizer-Metsera transaction should close within a few weeks as long as the biotech’s shareholders vote in favor.
“We cannot underscore the importance of Pfizer receiving FTC clearance for the proposed transaction, as there is no ambiguity with what would come next,” BMO wrote.
If Novo’s offer were to proceed, BMO believes it would take upwards of two years to close. “The state of limbo that Metsera would be under is not good for anyone.”
But without Metsera, Novo still needs to make some deals to fill up its pipeline, which has failed to live up to high analyst expectations after the initial success of the semaglutide franchise.
“We agree that Novo needs to consummate additional BD, but waging an antitrust fight, with billions of capital on the line seems to be shortsighted,” BMO wrote. “Moving fast must be coupled with precision, as merely breaking things is a recipe for disaster. Novo cannot afford to be reckless and must act strategically to right the ship that is so badly off course.”
