Merck & Co. has consumed Acceleron Pharma, clamorous activist investors notwithstanding.
Merck has gathered 63.3% of Acceleron’s outstanding shares, more than the 50% it needed to close the buyout, the New Jersey pharma said Friday.
The purchase of over half of Acceleron shares marked the last major hurdle for Merck to complete its $11.5 billion acquisition after having secured an antitrust go-ahead from the U.S. Federal Trade Commission (FTC) last week. Monday, the company said it has wrapped up the acquisition.
The path wasn't exactly straightforward; Merck extended its tender offer twice, all while fighting off multiple Acceleron activist investors.
After Merck unveiled the deal in late September, Avoro Capital, which had built a 7% stake in Acceleron, came forward with its opposition. Formerly called venBio, the investment shop is known for derailing Immunomedics’ $2 billion collaboration with Seattle Genetics (now Seagen) in 2017. Instead, the antibody-drug conjugate biotech was sold to Gilead Sciences last year for $21 billion.
Merck’s offer, at $180 per Acceleron share, significantly undervalued the biotech, Avoro argued. In multiple open letters, the hedge fund asked investors to not tender their shares and instead wait until after phase 3 readout for sotatercept—a pulmonary arterial hypertension (PAH) candidate that’s the crown jewel in the Merck transaction—to get a better price for the company.
At least three other Acceleron shareholders—Holocene Advisors, Darwin Global Management and Farallon Capital Management—have publicly opposed the deal.
While navigating the investor resistance, Merck also faced a delay for its buyout. It had to refile the premerger notification with the FTC earlier this month to allow the agency additional time for review. As a result, the company rescheduled the tender offer deadline to Nov. 18 before pushing it off one more day.
Now, Acceleron has become a wholly owned subsidiary. In sotatercept, the Big Pharma gets a potential first-in-class drug that could address the underlying PAH disease and expand to other pulmonary hypertension indications. Analysts at SVB Leerink have projected $2 billion in peak sales for the med.