It's a wrap: Merck collects enough Acceleron shares for $11.5B buyout despite activist investor defiance

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.

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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.

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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.