December 14, 2023 | Health Care | North America | Active

Cerevel Therapeutics / AbbVie: Deal Insight

Within a week after announcing its plan to acquire cancer drug developer ImmunoGen for $10.1bn, AbbVie announced that it has entered into a definitive agreement to acquire Cerevel Therapeutics (“Cerevel”), a biotech company focused on neurological therapeutics. AbbVie is offering $8.7bn for the target’s equity, or $45 per share in cash, representing a 73.1% premium to Cerevel’s undisturbed price on 1-Dec-23, before Reuters speculated about a potential takeover. The deal has been approved by the boards of both companies and is subject to Cerevel shareholder approval (50%); an AbbVie shareholder vote is not required. Private equity firm Bain Capital, which holds 36.5% of Cerevel, has entered into a support agreement. Conditions to closing include HSR clearance, and the notification is expected to be made within 10 days (by 16-Dec-23). The CMA and the EC have also been named as potential jurisdictions where antitrust approval might be required. The merger agreement contains customary clauses on representations, warranties, and covenants with MAC clauses containing specific carve-outs for war and pandemics. There is a non-solicitation clause with customary fiduciary-out. The preliminary proxy will be filed within 20 business days (by 5-Jan-24), the target shareholder meeting will be held within 30 days from the mailing of definitive, and the companies expect the transaction to close in mid-2024, against a long-stop date of 6-Sep-24 (which can be extended three times by 90 days each). The termination fee is $283.1m and the RTF is $653.3m. About Cerevel Cerevel has a pipeline of multiple drugs in clinical and pre-clinical stages that focus on several neurological disorders including schizophrenia, Parkinson’s disease (PD), and mood disorders. Its marquee pipeline drug is its late-stage emraclidine, which is currently in Phase 2 as a positive allosteric modulator (PAM) of the muscarinic M4 receptor. The drug is considered a best-in-class antipsychotic drug to treat schizophrenic patients where M4 PAM is a new mechanistic class that offers superiority over comparable atypical antipsychotics based on efficacy, safety, and tolerability. Muscarinic receptor modulators have demonstrated an increased potential to treat schizophrenia and this has therefore added even more value to emraclidin. The drug also avoids ...

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