SGEN M&A Arbitrage Play
SUMMARY
If the PFE SGEN M&A closes by end of Q1 '24 ...
Most likely closing timeframe ^1 and ^6
Return = 7-8% in 3-4 months
PFE agreed to pay $229/share
12/1/23 SGEN closed at $212.72/share
^FN Refer to milestones in SGEN/PFE or HZNP/AMGN acquisition timelines shown in footnotes section
RISKS
What are the chances that ...
FTC blocks the deal?
Very low
FDA is giving this deal a high level of scrutiny ^2
SGEN and PFE are in oncology
SGEN is a leader in Antibody drug conjugates (ADCs)
BUT, there is not much overlap in products/pipelines
As highlighted by European regulators on approval ^3
Pipelines target different segments & with different MOA
No loss of innovation because lots of competitors
Unlikely to impact prices for above reasons
FTC delays the deal close?
Low/medium
Not sure if low or medium, but NOT high risk
How could FTC delay deal?
FTC files lawsuit
Likely to get more concessions from PFE
IF occurs, would likely occur by end of year
30 days after PFE substantial compliance (SC)
SC should be announced any day now
But even if FTC delays the deal and files lawsuit
SGEN stock might go down 10-20% on lawsuit announcement
See HZNP price history below ^5
But the deal will still likely close in Q2 or Q3 '24
See timing of HZNP/AMGN closing in Footnotes below
SGEN then gets to $229/share
So ~7-8% return is delayed 1 yr
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^FN Footnotes
See PFE/SGEN and AMGN/HZNP timelines below
PFE/SGEN timeline
3/13/23 AMGN agrees to buy SGEN for $229/share ($43B)
7/14/23 FTC sends SGEN & AMGN 2nd request ^2
Means FDA is giving this deal more scrutiny - asking for more documents
8/28/23 - See AMGN/HZNP news below
$206.96 (+3.23%) (~+6.5% since 8/22/23)
9/1/23 AMGN settlement
$207.91 (+0.89%)
9/22/23 Positive results from 1st line bladder cancer study
Possible market expansion of PADCEV in early stages of bladder cancer?
$213.70 (+3.54%)
10/16/23 PFE has likely turned over all docs ^1
10/19/23 EU approval granted
https://ec.europa.eu/commission/presscorner/detail/en/ip_23_5123
10/23/23 Report that FTC sent out questionnaires to 3rd parties re: effect of deal on innovation in cancer
$216.87 (+0.64%)
10/31/23 PFE CEO reiterates expects deal to close late Q4 '23 or early Q1 '24 ^1
11/1/23 SGEN reports Q3 update
$571M net product sales (+33%)
Reiterates likely Q4 '23 or Q1 '24 timing of PFE M&A
11/10/23 PFE may file substantial compliance in 3-4 weeks
CNBC reports that there is not a concern that FTC will sue to block deal
More likely early 2024 close (rather than late 2023) ^6
$213.72 (+0.37%)
11/21/23
$214.17 (+1.10%)
11/29/23
$213.52 (-0.3%)
AMGN/HZNP timeline
11/30/22 Rumors that HZNP getting acquired
HZNP $100.29 (+27%)
12/11/22 AMGN agrees to purchase HZNP for $116.50
HZNP $112.36 (+15%)
1/26/23 Sen Warren concerned over HZNP/AMGN M&A
HZNP $111.25 (-1.55%)
1/31/23 FTC sends AMGN & HZNP 2nd request
$109.72 (-0.3%) (-~3% since 1/25)
3/22/23 Report that FTC probing AMGN acquisition of HZNP
HZNP $107.32 (-1.75%)
4/XX/23 AMGN & HZNP substantially comply with FDA 2nd request
4/21/23 Report of FTC closed door meetings possibly to discuss AMGN/HZNP M&A
$111.33 (-0.38%) (4/21-4/24/23 HZNP -1%)
5/16/23 FTC files federal lawsuit to block HZNP acquisition by AMGN: ^5
https://www.ftc.gov/system/files/ftc_gov/pdf/2310037amgenhorizoncomplainttropi.pdf
HZNP $96.34 (-14%)
6/22/23 FTC files agency complaint against AMGN: https://www.ftc.gov/system/files/ftc_gov/pdf/Amgen-Horizon-Part-III-Complaint-PUBLIC.pdf
$101.39 (- 0.21%)
8/9/23 (HZNP reported earnings
$104.65 (up ~5.5% since 8/4/23)
8/21/23 CNBC report that FTC & AMGN are making progress on settling
$104.98 (+1.08%)
8/23/23 FTC requests withdrawal of agency trial
8/28/23 FTC request to withdraw becomes public
$112.15 (+5.14% (+ ~7.5% since 8/22/23)
9/1/23 Consent agreement executed ^4
$115.30 (+2.27%)
10/6/23 Deal closes
$116.30 (+0.04%)
This article is not investment, tax, or legal advice. Please do your own diligence and seek advice from professional advisors representing your interests.
Article history:
Posted 12/5/23