Inside AbbVie's $10B buyout of ImmunoGen—and the bidding war it swooped in on

AbbVie is entering 2024 with a foothold in the antibody-drug conjugate (ADC) field thanks to its late-2023 buyout of ImmunoGen worth more than $10 billion. But according to a new securities filing, AbbVie didn’t pursue the cancer drugmaker until other suitors were already at the negotiating table.

ImmunoGen’s recent round of M&A deliberations began in April, according to the filing, when a company only identified as “Party A” reached out to CEO Mark Enyedy expressing interest in a potential transaction.

Before that, ImmunoGen had been routinely evaluating potential opportunities for deals of various types, but the interest from Party A struck up a round of talks that ultimately led to the sale.

However, Party A’s note of interest came without a proposed purchase price, a move that the company's advisors at Goldman Sachs and Lazard called “unusual but not unprecedented."

Before the talks moved along, ImmunoGen presented its first-quarter earnings report, which showed that its ovarian cancer treatment Elahere beat analyst expectations and caused a 25% increase in the company’s share price. Soon after that, positive top-line data from a confirmatory Elahere study led to a more than 100% jump in the company's share price and set the stage for a heated bidding war.

As the weeks passed, Party A still hadn’t offered a proposed price range despite Enyedy’s requests. The unidentified company instead preferred to see additional proprietary information before putting in an offer, which ImmunoGen wouldn’t budge on. Party A's talks were "discontinued" in late May and started back up again in September,

"Party B” came into the picture in August as ImmunoGen and its original admirer remained at an impasse. The new bidder proposed an offer of $21.50 per share in October, a price point that ImmunoGen asked to improve because the proposal was “not at a level" that would be adequate. Still, the ADC company agreed to make “limited” diligence materials available in order to help Party B come to an improved offer. Its next proposal was raised to $22.50 per share.

Meanwhile, ImmunoGen’s board had settled on five other drugmakers that could make for good bidders due to their “strong strategic interest, financial capacity and lack of competitive overlaps.” AbbVie was one of the lucky five and was asked to submit a preliminary bid by November 6.

Party B and ImmunoGen were still going back and forth on the bidder’s diligence requests when Party A eventually made its first offer of $18 to $20 per share in early November. That same day, AbbVie beat Party A’s bid with a $7 billion cash offer, which came to around $21.80 per share.

By then, the other companies that ImmunoGen had contacted were out of the race, with most of them unable to propose a competitive offer. The final round of bidding was composed of AbbVie, Party A and Party B, with final bids due on November 29. Party A was told to boost its proposal, while AbbVie was informed that it was not the highest bidder.

As the deadline approached, Party A communicated that it was “highly interested” in a deal and would be prepared to move “quickly” toward a transaction within its previously proposed price range. Party B’s binding proposal came out to $23.50 per share, while AbbVie took the cake with its offer of $31.26 per share.

ImmunoGen’s board unanimously agreed on the AbbVie merger, culminating in a joint announcement the following day. AbbVie’s buy was at a 94.6% premium to ImmunoGen’s closing share price on the last day of trading before the merger was announced, and a 55.9% premium to the highest closing price over a 52-week period that ended on that day.

The deal came out to $10.1 billion and represented an “extremely compelling opportunity” for AbbVie, the company's CEO Richard Gonzalez noted on a call following the announcement. The transaction was the third-largest in the industry during 2023, trailing only Pfizer’s Seagen buy and Merck’s Prometheus acquisition.