Bristol Myers Squibb engaged in Acceleron buyout talks but couldn't justify the price: report

Even though Acceleron sold itself to Merck for $180 per share last month, the company evaluated other options before pulling the trigger. One of those options was seeing whether Bristol Myers Squibb would be interested in a deal, Bloomberg reports

After Merck submitted its first offer to buy Acceleron for $160 per share back in July, Acceleron and its advisors reached out to "Party A" to see if it would be interested in pursuing a buyout, a Tuesday securities filing shows. The company believed "Party A" would be the "most likely competitive bidder."

"Party A" was Bristol Myers Squibb, Bloomberg reported Wednesday, citing a person familiar with the talks. The global drugmaker is Acceleron's partner on the FDA-approved anemia drug Reblozyl, and it holds a stake in Acceleron through its prior Celgene buyout.

About a week after Accleron CEO Habib Dable contacted BMS CEO Giovanni Caforio to discuss a potential deal, BMS and Acceleron entered a confidentiality agreement, according to the SEC filing and Bloomberg's report. Acceleron gave BMS access to its "data room" and held a series of technical presentations and due diligence meetings" with BMS representatives in the following days.

Discussions with BMS and Merck were clearly happening in parallel. While BMS entered its confidentiality agreement and started due diligence on August 16 and 17, respectively, Merck's revised confidentiality agreement was inked on August 17, with due diligence starting several days later.

Ultimately, BMS decided that Acceleron's pulmonary arterial hypertension candidate sotatercept "failed to support an acquisition proposal" at the company's current value, the filing said. BMS did instead offer Acceleron full forgiveness of Reblozyl royalties in exchange for future forgiveness on potential sotatercept royalties that BMS might owe, but Acceleron turned that offer down.

RELATED: Merck started its Acceleron pursuit at $160 per share, but CEO Davis balked at paying more than $180

In the end, Merck ended up paying $180 per share for Acceleron, or $11.5 billion, in a deal announced September 30. That price was up from the company's original July offer of $160 per share, or $10.2 billion.

Merck's initial offer represented a 39% premium to Acceleron's share price at the time, and Acceleron's stocks peaked at $182.78 on September 28 after the press started to get wind of the talks before the deal was public.

During the talks, Acceleron and its advisors also reached out to an unnamed company, "Party C," to discuss a potential deal. That company declined to engage in talks because it was pursuing "other strategic priorities," the filing said. 

Another company, "Party B," reached out to Acceleron after Bloomberg published an article on September 24 about the company being the subject of buyout interest. In response, Acceleron told the company that a "serious proposal would need to contain a price, an antitrust clearance commitment and a commitment to an expeditious timeline." A few days later, "Party B" told Acceleron it "could not be competitive with the price that was speculated in the market and was unwilling to make the regulatory clearance commitment."

RELATED: Trouble builds for Merck's $11.5B Acceleron buy as activist investor behind Gilead's Immunomedics deal says too early, too cheap

So the spoils went to Merck. For the New Jersey drugmaker, the Acceleron purchase would help reduce its dependence on megablockbuster cancer drug Keytruda, which is expected to lose U.S. exclusivity in 2028. Aside from sotatercept, the acquisition also gives the company partial rights to Reblozyl. Merck hopes the deal will close this year.

Even after the Acceleron deal, Merck's CEO Robert Davis still has an appetite for dealmaking, he told The Financial Times earlier this month. Sources told the newspaper that mRNA-focused companies and perhaps even neuroscience drugmaker Biogen could be on the company's M&A radar.