Pfizer Loses Legal Bid to Block Novo’s Metsera Offer

A judge denied Pfizer Inc.’s request to temporarily block Novo Nordisk A/S’ $10 billion bid to acquire the obesity startup Metsera Inc., saying the US pharmaceutical company’s objections to the deal don’t warrant a delay.

Delaware Chancery Judge Morgan Zurn concluded Wednesday that Pfizer didn’t level legitimate complaints about Novo’s effort to supplant it as New York-based Metsera’s buyer and refused to bar the Danish company from proceeding with the transaction.

Pfizer has matched Novo’s offer for Metsera, the Financial Times reported late Wednesday, citing unidentified people familiar with the matter. The company had already raised its original bid earlier this week to retain its hold on the startup.

The court’s ruling removes one impediment to Novo’s unconventional plan to acquire the three-year-old company with a handful of experimental drugs in the hottest section of the pharmaceutical industry. The medicines include a weight-loss shot that could rival market-leading drugs from Novo and Eli Lilly & Co., triggering a bidding war over the startup that’s involved more than a half-dozen companies.

Pfizer said the court’s decision fails to address the legal issues that the company had raised.

“Pfizer intends to continue to pursue its claims vigorously through the ongoing litigation process as well as in its parallel antitrust litigation pending in Delaware federal court,” the company said in a statement. “We are confident that Novo Nordisk’s unprecedented and illegal scheme to circumvent antitrust scrutiny will not stand.”

Novo said it agreed with the court’s decision and that its bid is in the best interest of the Metsera shareholders.

Pfizer originally reached a deal to buy Metsera for $4.9 billion in September. Novo shocked Wall Street and Pfizer with its own offer, disclosed on Oct. 30, which has led to further escalation between the two pharmaceutical heavyweights.

Superiority Claims

The brawl has subsequently spilled into the courts and spread to regulatory agencies despite the ongoing government shutdown.

New York-based Pfizer sued Novo and Metsera in Delaware last week, arguing the Danish company’s bid violated the terms of the original agreement because it didn’t qualify as a “superior” proposal.

Both pharmaceutical companies submitted enhanced offers in recent days. Metsera still deems Novo’s bid superior and gave Pfizer two business days to counter-offer. Otherwise, Metsera said it will have the right to terminate its deal with Pfizer.

Public comments from Novo and Pfizer suggest they both “may have further ammunition to bid,” attorneys for Metsera wrote in a filing earlier Wednesday in Delaware Chancery Court. Metsera said in the filing it was open to more offers. It declined to comment on the judge’s ruling.

Pfizer contends Novo’s bid is inferior, saying it’s not likely to survive regulatory review. It’s antitrust complaint in Delaware federal court also calls Novo’s bid anticompetitive.

Zurn ruled from the bench that Metsera’s board might be wrong about the antitrust risks of the Novo deal, but said Pfizer presented no evidence that they weren’t acting in good faith in deciding that Novo’s offer was superior.

FTC Weighs In

Staff at the US Federal Trade Commission on Tuesday raised concerns that Novo’s proposed bid for Metsera “may violate the procedural provisions” of the law that requires a premerger review.

In a letter to lawyers for Novo and Metsera dated Nov. 4, Daniel Guarnera, director of the FTC’s bureau of competition, said Novo’s offer would violate the Hart-Scott-Rodino act if it’s consummated “without first filing for premerger review.”

Because Metsera would receive considerable upfront payment “in exchange for limitations on its independence, Metsera, its shareholders, and its employees may have reduced incentive to continue its development efforts to bring its pharmaceutical products to market,” Guarnera wrote in the letter.

Novel Bid

Novo surprised investors when it came forth with its unusually structured bid for the startup, intended to top Pfizer’s existing deal.

Once Novo and Metsera sign a definitive agreement, the Danish company would pay the biotech $62.20 per common share in cash, plus employee equity and transaction costs. In exchange, Metsera would issue Novo non-voting preferred stock representing half of its share capital. Then Metsera would declare a $62.20 per common share dividend, with payment to come “shortly thereafter.”

After the deal is approved by shareholders and regulators, Metsera shareholders would receive rights entitling them to additional future payments worth as much as $24 per share, based on whether Metsera hits certain milestones. Once those so-called contingent value rights are issued, Novo would acquire the remaining outstanding shares of Metsera.

The deal’s drop-dead date, which terminates the agreement if it hasn’t closed, would be triggered at 30 months, a longer than normal period in the merger and acquisition space.

Pfizer argues Novo doesn’t intend to close the Metsera deal, but instead wants to drag out the regulatory approval process so it can reap billions of dollars more in sales of Ozempic and Wegovy — its best-selling drugs for diabetes and weight loss — over the next several years.

Metsera called Pfizer’s antitrust arguments “nonsense” and Novo labeled them “absurd” in statements Monday.

By Jef Feeley

Learn more:

Novo Nordisk Offers $9 Billion Unsolicited Bid for Obesity Drug Maker Metsera

The Danish pharmaceutical company, which makes Ozempic and Wegovy, made a surprise offer for the US firm after Pfizer acquired it for $4.9 billion in September.