As The Beatles once sang, we all need a little bit of help from our friends. So, according to Reuters, it might not come as a huge surprise if U.S. drug giant Pfizer (PFE) uses its connections with President Trump to win an $8.5 billion bidding war with Danish rival Novo Nordisk (NVO) over obesity-fighting biotech Metsera (MTSR).
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Superior Bid
Pfizer described Novo as “reckless” after it tried to hijack the U.S. firm’s agreed deal with Metsera with an $8.5 billion offer yesterday. Pfizer said in September it had agreed to acquire Metsera – which is aiming to “reduce the physical, emotional, and economic burdens of obesity,” for $47.50 per share, or an enterprise value of $4.9 billion, with the potential for another $22.50 per share in payments if certain targets are hit. That would take the total to around $7.3 billion.
Pfizer has four business days to make a counteroffer, Metsera said, describing Novo’s bid as “superior.” PFE stock rose 1% today with Novo down 2% and Metsera flat.
A Pfizer spokesperson told Reuters that it did not have an immediate comment on whether the company would do so. However, it has declared that it is ready to pursue all legal avenues to challenge Novo’s bid.
Trump Card
That is where President Trump could come in.
Bernstein analyst Courtney Breen said the Trump administration is relatively transactional and tends to favor U.S.-oriented or politically savvy companies. In addition, Pfizer CEO Albert Bourla has particularly close ties to the president.
“If there is the potential for any political interference … Pfizer is on the right side of that equation at this point,” Breen said.
Bourla has reportedly worked hard to strengthen his relationship with Trump this year, traveling often to the White House and Mar-a-Lago to meet with the president.
Pfizer was the first to break from other major drugmakers and strike a deal to lower prescription drug prices, with Bourla sharing the stage with Trump at the White House.
“Bourla has done a good job at creating a relationship with the administration that will hopefully allow them to get access to the market,” said Brian Mulberry, portfolio manager at Zacks Investment Management.
Caution Needed
The prize is a big one with analysts forecasting that the weight-loss category is set to grow to $150 billion by the early 2030s. Both Pfizer and Novo could do with a boost:
However, Pfizer needs to be cautious. “If they go and just ramp up their price and their offer to Metsera, I think there could be some mixed reactions to that, because people don’t want Pfizer to overpay for M&A like they perhaps have in the past,” Breen said.
However, Novo, whose weight-loss portfolio includes the drug Wegovy, could trip itself up given antitrust concerns.
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