INDUSTRY SPOTLIGHT: Merck

Merck’s $11.5 billion bid for Acceleron Pharma

This week from around the industry, Back Bay comments on Merck’s $11.5 billion bid for Acceleron Pharma, which was announced in September.

This deal has received intense push-back from activist investors based on a disagreement in valuation. The shareholder dispute stems from Merck’s offer of $180/per Acceleron share (a 38% premium to Acceleron’s average stock price in the past three months). This offer is perceived as severely undervalued in part because:

• Acceleron’s lead asset, sotatercept, reached an inflection point with an impending phase 3 read-out

• Biotech M&A transactions typically transact for well over the 38% premium Merck is offering, according to activist investor, Avoro Capital. They, along with other investors, have noted that deals in the PAH space have gone for 85-95% premia to market.

Watching the evolution of this high-stakes deal, and the strategies and tactics playing out in public will be extremely interesting.

DEAL TIMELINE

September 30th, 2021 - Merck announces agreement to acquire Acceleron for $180 per share

September 30st, 2021 - Activist investor releases press release in objection to Merck’s bid

October 29th, 2021 - Merck temporarily withdraws the pre-merger notification and report form to allow FTC more time to review

November 1st, 2021 - Merck refiles the pre-merger notification