On the 13th of December 2021 Pfizer Inc, a US-based pharmaceutical company, announced a definitive agreement to buy Arena Pharmaceuticals Inc, a clinical stage company. The value of the deal amounts to $6.73bn, with an offer price of $100 per share. The board of directors of both companies have unanimously approved the transaction.
Investment Considerations
The rationale behind the acquisition would be an expansion in terms of innovative products, potentially enhancing growth through 2025 and beyond. The acquisition aims at offering a new, differentiated best-in-class approach to address unmet needs for a broader number of patients with immuno-inflammatory diseases.
Pharmaceutical industry market
Pfizer held five percent of the world’s prescription drug market in 2019 and is predicted to forfeit 1.5 percent of the global market until 2026. The acquisition is expected to bring Pfizer a competitive advantage in the sector as it would benefit from the portfolio synergies of the two companies.
Pfizer and Arena Pharmaceuticals
The transaction will combine Pfizer’s leading research and global development capabilities with Arena’s innovative potential therapies for the treatment of several immuno-inflammatory and cardiovascular diseases. The plan is to accelerate the clinical development of “Etrasimod” for patients.
Conclusions
The proposed transaction is subject to customary closing conditions, including receipt of regulatory approvals and approval by Arena’s stockholders. As stated by Amit D. Munshi – Arena’s President and CEO – “this transaction represents the best next step for both patients and shareholders”.
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Authors: Giulia Chinca, Yash Kesharwani, Riccardo Celani
ESCP Finance Society 