April 18, 2023 | Health Care | North America | Ended

Prometheus / Merck: Deal Insights

Pharmaceutical giant Merck has agreed to buy biotechnology company Prometheus Biosciences for $10.8bn, the companies announced on 16-Apr-23. The $200 per share offer implies a 75.4% premium to Prometheus’s undisturbed price on 14-Apr-23. The merger agreement, signed the next day, sets out conditions to closing that include Prometheus shareholder approval (50%) and antitrust approvals (only HSR is specifically mentioned). Prometheus is subject to no-solicitation with a customary fiduciary-out and a burdensome conditions clause restricts the companies from taking any action which “would have any more than an immaterial effect on the business, operations or financial condition of the company [Prometheus].” On timing, the preliminary proxy will be filed within 10 business days (by 28-Apr-23) and HSR notification within five business days (by 21-Apr-23). Completion is expected in 3Q’23 against a long-stop date of 15-Apr-24, the companies said. The termination fee is $325.4m and an RTF is $650.7m. While funding is not a condition to closing, Merck will finance the takeover through cash and commercial paper, or through new debt issuance; the acquirer currently has $13.2bn of cash and equivalents on its balance sheet and currently has net leverage of ...

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