TLDR
- Novo Nordisk withdrew from the $10 billion bidding war for Metsera after Pfizer secured the deal, with investors relieved over concerns about Novo’s complex offer structure
- Novo Nordisk stock rose 2.6% on Monday following the exit from the Metsera acquisition attempt
- The U.S. Federal Trade Commission warned that Novo’s proposed deal risked violating antitrust laws due to competition concerns
- Norway’s sovereign wealth fund will abstain from voting at Novo’s shareholder meeting this Friday over governance concerns about dual leadership roles
- Novo Nordisk shares have dropped more than 70% since June 2024 and are trading near their lowest levels since mid-2021
Novo Nordisk stock climbed 2.6% on Monday morning after the company withdrew from its pursuit of Metsera. The Danish drugmaker stepped back from the heated bidding war after Pfizer secured a $10 billion deal for the obesity drug developer late Friday.
Novo Nordisk A/S, NVO
Investors appeared relieved by the decision. The acquisition attempt had become a distraction as Novo faces pressure in the weight-loss drug market.
“Although Metsera is undoubtedly an attractive asset to Novo, I’m quite pleased that this is now over because it was becoming a little bit of a distraction for investors,” said Simon Baker, an analyst at Rothschild & Co Redburn.
The bidding war started in late October when Novo made an unsolicited offer for Metsera. This came just one month after Metsera and Pfizer had already agreed to a deal.
Metsera ultimately rejected Novo’s bid despite previously calling it superior. The company cited U.S. antitrust concerns as the reason for choosing Pfizer instead.
The U.S. Federal Trade Commission contacted both Novo and Metsera last week. Regulators warned that their proposed deal could violate antitrust laws.
Deal Structure Draws Criticism
The structure of Novo’s offer raised eyebrows among investors and shareholders. The proposal included billions in upfront cash payments for non-voting shares equal to half of Metsera’s equity.
Novo would have gained full control only after antitrust regulators approved the deal. This unusual arrangement drew criticism from major shareholders.
Markus Manns, a portfolio manager at Union Investment, said Novo damaged its reputation with the hostile bid. He pointed to the unorthodox deal structure as particularly concerning.
“We expect Novo to improve their risk management and use their cash more carefully,” Manns told Reuters.
Governance Questions Surface
Norway’s sovereign wealth fund announced it would abstain from voting at Novo’s shareholder meeting on Friday. Norges Bank Investment Management holds a 1.79% stake worth $5.54 billion in the company.
The fund declined to explain its decision to abstain. The vote centers on installing Lars Rebien Sorensen as chair of both the Novo Nordisk Foundation and the company itself.
This dual role has sparked unease among investors. The foundation controls 77% of voting rights through Novo Holdings.
Current chair Helge Lund and six other independent directors will step down at Friday’s meeting. They clashed with the foundation over the pace of change at the company.
A Novo Nordisk spokesperson said the company welcomed interactions with investors at the meeting. The foundation declined to comment on the sovereign wealth fund’s stance.
Novo Nordisk shares have fallen more than 70% since June 2024. The stock is now trading near its lowest level since mid-2021 when the company launched Wegovy in the United States.
The company has lost market share to Eli Lilly’s weight-loss drugs. Novo has also cut its full-year forecasts four times in 2024.
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