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UPDATE: Denmark's Lundbeck to acquire Alder BioPharmaceuticals in $1.95B deal

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UPDATE: Denmark's Lundbeck to acquire Alder BioPharmaceuticals in $1.95B deal

H. Lundbeck A/S agreed to acquire Alder BioPharmaceuticals Inc. in a deal valued at up to $1.95 billion net of cash.

The deal will add Alder's IV therapy for migraine prevention, eptinezumab, to Lundbeck's portfolio of brain disease therapies.

Eptinezumab is an investigational monoclonal antibody that is administered via intravenous infusion. Bothell, Wash.-based Alder, a clinical-stage biopharmaceutical company, is developing eptinezumab in late-stage studies for preventing migraine in adults.

Valby, Denmark-based Lundbeck will begin a tender offer for all outstanding shares of Alder, in which Alder shareholders will be offered an up-front payment for $18 per share in cash, along with one nontradeable contingent value right that entitles them to an additional $2 per share upon the European Medicines Agency's approval of Alder's drug eptinezumab.

Additionally, Lundbeck will acquire any Alder shares not tendered into the tender offer through a merger for the same consideration. The merger will take effect as soon as practicable after the tender offer's closing.

In February, Alder submitted a biologics license application to the U.S. Food and Drug Administration for eptinezumab, with the agency setting a Prescription Drug User Fee Act action date of Feb. 21, 2020.

Lundbeck expects to seek EU approval for eptinezumab in 2020, after which the company will file applications globally, including in China and Japan.

Lundbeck said the Alder takeover will expand its capabilities to develop therapies for more brain diseases. Along with eptinezumab, Lundbeck will also gain access to Alder's early-stage migraine preventive therapy, ALD1910.

Lundbeck expects to fund the acquisition through existing cash resources and bank financing.

Alder's board unanimously approved the deal and the company will recommend to its shareholders to tender their shares to Lundbeck. More than 50% of all outstanding shares of Alder should be tendered at the offer's expiration for the deal to push through.

The deal is expected to close in the fourth quarter, subject to closing conditions, including a Hart-Scott-Rodino review in the U.S.

The transaction is anticipated to be core EPS accretive in 2023 assuming FDA approval in the first quarter of 2020, followed by regulatory approvals in other territories, including Europe.

Lundbeck said the expected impact from the deal on the company's profitability in 2019 will depend on the timing of the transaction's closing. Assuming the deal closes Nov. 1, Lundbeck expects to incur transaction costs of about 200 million Danish kroner related to the takeover and integration and retention costs of between 400 million kroner and 500 million kroner, on a pro forma basis. Lundbeck will also recognize two months of Alder's operating costs, which is estimated at between 325 million kroner and 400 million kroner.

Lundbeck said the transaction is not expected to result in any change to its current dividend policy and continues to expect a payout ratio of 30% to 60% for 2019.

MTS Health Partners and PJT Partners are acting as the exclusive financial advisers of Lundbeck, while Baker McKenzie is serving as legal adviser. Centerview Partners is acting as exclusive financial adviser for Alder, and Skadden Arps Slate Meagher & Flom LLP and Cooley LLP are its legal advisers.

As of Sept. 13, US$1 was equivalent to 6.74 Danish kroner.