November 17, 2025 • 20 mins
Inside the Biggest M&A Deals You Need to Know (Pfizer, LVMH, Atlético Madrid, Parker Hannifin)
In this week’s M&A episode of AmplifyME Market Maker, Anthony and Piers break down the biggest deal headlines from Apollo taking control of Atlético Madrid to LVMH’s stake in Swiss movement maker Le Joux-Perret, Parker Hannifin’s $9.25 billion filtration acquisition, and Burger King’s China JV. The deep dive focuses on Pfizer’s $10 billion battle with Novo Nordisk for Metsera, unpacking the bidding war, regulatory tensions, the strategic race for obesity drugs, and why contingent value rights (CVRs) make this deal so unusual.
(00:00) Atlético Madrid, LVMH & Parker Hannifin
(03:55) Pfizer vs Novo Nordisk for Metsera
(05:10) How the Bidding War Escalated to $10B
(12:27) Contingent Value Right
(18:10) Key Deal Takeaways
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Hello and welcome back to the Market Maker podcast.
A brand new week and a brand newshow because now we are bringing
back a designated program for M&A deals.
And So what I'll try and do every week is just rattle
through some main headlines, thebiggest deal of the previous
week, and then Piers and I will do a deep dive essentially into
(00:23):
one of those chosen deals, in this case Pfizer to acquire MIT
Sera. So a quick run through the
headlines. The first one is Apollo Sports
Capital is taking control of Athletico Madrid, one of
Europe's most prestigious football clubs at a €2.2 billion
valuation. The focus there shifting to
(00:45):
boosting the squad, but not onlythat, developing the area around
the stadium, part of a broader private equity trend, monetizing
European football's global pool.In terms of if you're a student
applied to some of the firms at the moment, PwC provided by side
financial tax, IT cyber due diligence and tax structuring
(01:07):
services to Apollo. So it could be an interesting
one to take away if you're currently in the PwC pipeline.
The other one here, you might beable to help me out with some
pronunciations here. Piers, I'm sure you're at the
airport having a quick look at this because LVMH is watch
division has taken a minority stake in Swiss movement maker
(01:28):
Lejuperrais. Nailed it.
Nailed it. Yeah, I did.
I did fail. French, I know.
So while it stays independent under Citizens Group, this gives
LVMH brands like Tag and Hublo closer access to high end Swiss
(01:48):
know how, reinforcing their manufacturing base as watch
growth stays modest. Next deal was Parker Hannah Finn
is buying Filtration group for 9and a quarter billion dollars
using cash and new debt to builda filtration powerhouse. 85% of
revenue less. Sexy.
Less sexy than your phone watches?
(02:10):
Well, you know, that's what I dofor the day job and then when I
go to the bar later and I'm trying to, you know.
So with that deal, Barclays was involved.
Final one, restaurant brands shortened to RBI formed a joint
venture with Beijing based CPE, which will invest $350 million
(02:32):
and take an 83% control of Burger King China to accelerate
their openings. McDonald's at Burger King.
Piers. At McDonald's, OK all day that.
Full. Full most.
Overrated Burger King's the mostoverrated fast food restaurant
(02:52):
on the planet. OK, Shrug, Burger King.
I'm sure you're going to get a lot of disgruntled comments on
this video now. So part of that is a recent
momentum including a 10 1/2 percent same store sales growth
and new marketing around the Whopper and crisper.
Have you had a crisper? A Burger King?
I've never heard of a crisper. Well, you've you know your next
stop needs to be in South Korea then, because that's their new
(03:15):
lineup of chicken burgers, of course.
Do you like South Korean chick crispy chicken mice?
Yeah. OK.
Very popular so Morgan Stanley was advising RBI but as I said
our deep dive deal of the week. Shares of Mitzira fell over 15%
one five in early trading last week, with weight loss drug
(03:37):
developer accepting A sweetened offer from Pfizer to end a
fierce bidding war between pharma giant and Danish rival
Novo Nordisk. So this deal then perhaps we
could just look at some of the headlines, talk about some of
the strategy, what's behind thismove?
Yeah, it's a great story becauselike you've got two big
(03:58):
heavyweights kind of just slugging it out, a proper
straight up bidding war. You kind of very rarely get
these. And so it's actually just quite
good fun, like on the sidelines watching it happen.
So this is Pfizer, you know, squaring up against Novo and and
obviously, you know, there's so many interesting themes here.
(04:21):
Obviously, you know, we talk about the AI thing, we're kind
of in healthcare, It's obviouslyweight loss, right?
The weight loss drug is like thethe big kind of future kind of
demand cake that everyone wants to try and get a piece of.
And so that's why Mezira here iskind of caught in this bidding
(04:43):
war between these two giants. So Pfizer, I mean, have been
forced to stump up more cash andthe final sort of agreement,
basically, we'll get into the details in a minute, but it's
basically $10 billion on valuation.
But Pfizer were hoping to pay a lot less than that and
(05:06):
unfortunately had to dip into their pocket.
Just before we kind of get into the details.
I thought it was quite interesting to think about.
Well, who are who are these two giants of the healthcare
industry? You know, how big are they,
Pfizer, Novo Nordisk, how big are they compared to each other?
And actually where? Here's a pop quiz for you.
Here's a question that you weren't expecting.
(05:29):
Where who's bigger first of all,do you think?
Well, my intuition would say Pfizer, but because I go to
Pfizer first, I'm going to say Novo Nordisk.
You, you are correct. That's the kind of what that was
the same. I had exactly the same thought.
I thought our Pfizer's going to be bigger, but but it's not
actually so. And where where do you think
(05:51):
actually Pfizer's not even in the top ten of global
pharmaceutical companies, They're actually. 11th OK, yeah,
that's really. Surprised me Novo Nordisk is
sits at #8. So I'm assuming Pfizer has been
on a declining pattern then? Well, yeah, but so is Novo
Nordisk. So this is an interesting part
of the story because really, both of them, Well, no.
(06:15):
So Pfizer had a massive COVID boom, right?
So they're one of the vaccines. They hugely kind of benefited
from that COVID situation. Ever since then, obviously, the
COVID thing has gone away. Ever since then, they've been
trying to get into this weight loss drug game, but all of their
attempts have failed. So all of the tests they've had
(06:39):
on any drug prototypes that they've been developing has
basically failed. Hence why they're saying, all
right, well, we we've tried it organically.
Let's just go out and buy into this game, shall we?
OK. Novo Nordisks.
They're kind of, yeah, I would say less beneficial of COVID,
(06:59):
but their valuations are halved over the last 2-3 years.
And actually this is about the weight loss drug.
So they were one of the real, you know, the early sort of
winners of of this kind of weight loss situation.
So you'll have heard of Wugovi and Osempic, all right, That's
their kind of novos like cruel crown jewels, OK.
(07:23):
And so their valuation got really pumped, let's say 2223.
But ever since then it's halved.And that's because actually the
demand and it kind of again, thinking about AI and trying to
predict future demand. It's the same with this future
demand has turned out to be a little bit underwhelming.
(07:43):
And so Novo's cap market caps halved like in the last few
years as a result of this. Now, I don't know whether that
means the Novo CEO is just angrybecause I don't know what he was
doing here, but I wonder if he was just meddling because Pfizer
back in September agreed a deal with Matsira.
(08:07):
They agreed terms and the deal was valued at 7.3 billion,
right? No vote.
Then obviously kind of were alerted to this because Pfizer
hasn't been in this weight loss drug game.
So they're threatened by it. So they just go, well, is she
right? Fine.
Then there's no way we're going to let you buy net zero for 7.3
(08:30):
billion. We're either going to try and
buy them ourselves or at the very least we're just going to
force you to pay a lot more money.
I actually think maybe it's the latter here, but so Novo, so
remember September deal agreed, right?
Merger agreement agreed, 7.3 billion.
October Novo come in and go, right?
We're bidding 8 1/2 billion. It wasn't there that wasn't
(08:53):
there a moment when the CEO of Novo was like, giving it the big
one. Yeah, well, he was up the White
House just for something else. And like, obviously you do a bit
of a press piece. So he stepped on the mic and he
got asked about the Pfizer deal and he and he said Novo's bid 8
1/2 billion is higher. And he tells Pfizer to put its
(09:15):
hand in its pocket and bid higher.
Which is why I'm saying, I wonder if he was just kind of
meddling. They're just kind of bidding to
force Pfizer to actually end up paying more.
But anyway, right, He bid 8 1/2.Pfizer then said, hang on, you
can't do that. This violates antitrust laws.
This is reckless. It's kind of an unprecedented
type of approach. Pfizer actually then thought
(09:35):
about suing Novo and Metzira, which couldn't have been great
for the relationship. Anyway.
It then turns out that Pfizer go, oh God, all right, fine,
we'll bid some more. So they then bid up to 8.1
billion and they didn't go to the 8 1/2 billion that Nova went
(09:57):
to. And that's because there's some
regulatory risk with the Novo deal because Novo already have a
big slice of that weight loss drug sort of economy.
It's like, well, the regulator and the antitrust people, we'll
be all over that. And so there's there's much more
regulatory risk with no vote buying MIT sera than Pfizer
(10:20):
because Pfizer aren't in the weight loss game.
So because of that Pfizer is saying, well look Nova is 8 1/2
billion bid. You know, our 8.1 billion was
lower in monetary terms is actually a better bit because
there's much less regulatory risk.
Is on the regular regulatory risk?
Is there anything to be said forthe fact that one company is US
(10:42):
and one company's European? I mean, it's a good question.
Are you always going to, if it'sa, you know, make a choice, pick
your side and you're going to gowith your domestic firm or have
preferential treatment? That, that, that that is true.
(11:03):
Yeah. I mean, but these are such
global businesses, you're going to get regulatory scrutiny from
lots of different jurisdictions.But yeah, what your Yeah, your
home team player is going to gethome advantage, right?
You would have thought so. Anyway, Pfizer bid 8.1.
All right, so Novo said, all right, well, we'll see your 8.1,
we'll raise you to 10. So he'd bid 10, Billy hit.
(11:26):
And then basically Pfizer was like, oh, this is so annoying.
Fine, we'll bid 10 as well. And then at that point, Novo
just pulled out of the race. And I just wonder.
Oh, Mikey. Mikey is just absolutely busted.
He has played a perfect hat hereand kind of folded at the right
(11:47):
time. Anyway, Pfizer's having to stump
up 10 billion when they originally had agreed terms at
7.3. This is a little bit painful,
but if we look at the structure of the deal, it's actually not
ten billion, it might become 10 billion.
And So what they've bid. So at the 10 billion valuation,
(12:07):
that's 86.25 dollars per share, right?
The deals going to go like this 65 point $6 per share cash.
That's your kind of purchase price day one.
The rest, which is another, another 20.65 dollars per share
gets wrapped up in what's calleda contingent value, right?
(12:30):
OK, ACVR, All right. This is basically an IOU that
only pays out if certain future events happen.
It's like an earn out. OK, so it could be that Pfizer,
yes, they do end up paying 10 billion, but actually they might
not. And really it depends on the
success of net zero's weight loss drugs because whilst
(12:54):
they've got their main one at the moment, you've got to inject
yourself once a month. Now the once a month thing is
good, it's less frequent. So that's why it's one of the
popular ones, but they've got a couple of oral kind of in
tablets coming that's in testingand it's it's nearing the first
(13:16):
in human testing, right? Because basically what people
are saying, who's going to win this weight loss game in the
end, you need something, you just need a pill you're going to
swallow. Anybody can nail that more fact.
They're going to be, you know, looking really interesting in
this race, so. Yeah.
Just to just to add with the CVRSI was just kind of curious,
I just had a quick look. So these contingent value rights
(13:38):
CVRS, they're not common in M&A deals.
And the rough estimate is less than 5% of all M&A deals use as
CVR, according to most industry estimates, most common biotech
and pharma deals because of FDA approval, clinical trial
processes and so on. That's right.
The hurdles just way higher, youknow, in the end, your product
(14:02):
is drugs that human beings ingest.
So the, the risks of not gettingit right are absolutely the
highest, highest, highest, highest, right.
So therefore, you know, obviously the regulatory
approval system is just a much bigger minefield.
So that's why yes, on paper. So Metzira have got their their
(14:25):
GLP ones, right? And they've got 2 oral GLP one
candidates coming down the track.
It might be they fail. Now Pfizer knows all too well
about this. They've been trying to
organically create their weight loss drug themselves and it's
failed at the testing phases, right?
So the value of the Matsira business hinges on the success
(14:50):
of the outcome of these two particular oral tablets, right?
So that's why you've got this urn out.
I mean, sure, if these tablets pass and like they're into
production and well, hey, let's go.
Well then, all right, 10 billions of steel, OK, But if
they don't, well, all right, they're not going to pay the
full 10. But Even so, what they end up
(15:11):
paying, I can't do the maths that quickly, but it'd be around
about 7, actually probably 7, around about 7 billion.
That'll probably be expensive, right?
They'll have overpaid. So it's quite a binary situation
here. And that's why you get these
structures that occur in in the kind of healthcare deals, which
is unusual in in most other sectors.
(15:32):
And just just for awareness, City were the financial advisor
to Pfizer, Goldman's Guggenheim Securities, Bank of America were
for Metzira. Maybe to conclude then on this
one, just to recap sort of two points.
What why do a bidding war like what's strategic gain of going
(15:53):
into a bidding war for how you've described it, it just
sounds like don't do that because it's you know, it's just
going to cause problems on on both ends going into that tit
for tat kind of game. And then maybe to wrap up with
some just overall top level strategic themes to take away
for anyone thinking about this as a deal to articulate.
When you've got a prized asset in MIT Sierra, you know, it's
(16:17):
such a if, if I was oral tabletspass.
I mean, there's a goldmine, right?
And it's such a difficult game and it's such a long.
So this is mainly against the back of pharmaceutical sector
specifically. It's such a long road to develop
(16:37):
a drug, get it through all the testing and then get it out to
the mass market, don't forget. So you've got a whole
manufacturing and distribution and logistical kind of headache
as well. It takes years and years and
years and years, right? So when something comes up
where, OK, you've got a smaller player who seemed to have
(16:57):
cracked it in this particular niche.
Well, therefore the big guys andparticularly Pfizer have kind of
missed out on this weight loss thing.
It's like becomes this is this is our way of buying into this
race. Now for Novo, again, we don't
know, maybe they did want to buyit as well because all right,
(17:18):
just add it to what they've already got and become a
dominant player in the weight loss space.
I mean, great strategically thatwould make sense.
But at the very worst, they've just made one of their key
rivals spend an extra 2.7 billion that they didn't want to
spend. So that's great for their for
(17:40):
Novo and their rival because then Pfizer got less money to
spend on other stuff like developing new trucks, for
example. OK.
So it just kind of puts the handbrake on one of your rivals.
So, so for Novo, this is great. I mean, fine, all right, They
didn't get the company, but they're already in that space.
(18:00):
So worst case, they'll just put a handbrake on Pfizer.
They'll be pretty happy about that.
All right, well, to wrap up, like we always try and do with
these deals, just to make it a nice off the shelf take away if
you'd like as to things that have been covered in the
conversation. So #1 obesity drugs is a growing
and promising industry. I mean, you've talked about it.
(18:21):
It's like the AI version within this healthcare space.
So very large addressable opportunity by early next
decade. So it's going to continue to
draw sustained big pharma investor focus #1 #2 buy
overbuild, just as you describedthe path for Pfizer.
(18:42):
So this is about then utilizing what Pfizer does have, which is
global clinical manufacturing, commercial footprint.
It's like buy and build, use your existing infrastructure
ecosystem to just get hold and then distribute and then #3
regulatory advantages. A real deal closes.
In this case, an FTC core warnedof risks in Novo Nordics
(19:05):
proposed structure. Well, Pfizer stated this path
had FTC approval. And so just push through and
before you mentioned, and we've covered contingent value rights,
CVRS used as a hedge of deal risk.
And then #5 which I guess is something to just consider,
which is the other external risks outside of the control of
(19:28):
these companies and their drugs,which is the government and
policy and law, which is the commercial environment for
obesity drugs is changing prettyfast.
One of the recent things that we've just had is a new White
House backed pricing framework, which sets lower than expected
price anchors for some of these obesity drugs.
(19:49):
So again, capping the overall potential of this huge market
opportunity. All right, Well, look, we'll
wrap it up there short and sharp.
So hopefully a useful conversation nonetheless, if
there's any particular deals that you see after listening to
this that you would like us to cover.
We'll record them generally at the end of the week and then put
(20:11):
them out at the beginning of thefollowing week.
So put in your bidding for what stories you'd like us to cover.
Anything on the M and A deal front.
We'll be doing our own anyway and we'd love to have you take
part. So shout out finally to our
researcher SARP, as always, for putting this stuff together for
us. So take care and have a great
week ahead. All the best.
(20:33):
Thanks a lot.
Hello and welcome back to the Market Maker podcast.
A brand new week and a brand newshow because now we are bringing
back a designated program for M&A deals.
And So what I'll try and do every week is just rattle
through some main headlines, thebiggest deal of the previous
week, and then Piers and I will do a deep dive essentially into
(00:23):
one of those chosen deals, in this case Pfizer to acquire MIT
Sera. So a quick run through the
headlines. The first one is Apollo Sports
Capital is taking control of Athletico Madrid, one of
Europe's most prestigious football clubs at a €2.2 billion
valuation. The focus there shifting to
(00:45):
boosting the squad, but not onlythat, developing the area around
the stadium, part of a broader private equity trend, monetizing
European football's global pool.In terms of if you're a student
applied to some of the firms at the moment, PwC provided by side
financial tax, IT cyber due diligence and tax structuring
(01:07):
services to Apollo. So it could be an interesting
one to take away if you're currently in the PwC pipeline.
The other one here, you might beable to help me out with some
pronunciations here. Piers, I'm sure you're at the
airport having a quick look at this because LVMH is watch
division has taken a minority stake in Swiss movement maker
(01:28):
Lejuperrais. Nailed it.
Nailed it. Yeah, I did.
I did fail. French, I know.
So while it stays independent under Citizens Group, this gives
LVMH brands like Tag and Hublo closer access to high end Swiss
(01:48):
know how, reinforcing their manufacturing base as watch
growth stays modest. Next deal was Parker Hannah Finn
is buying Filtration group for 9and a quarter billion dollars
using cash and new debt to builda filtration powerhouse. 85% of
revenue less. Sexy.
Less sexy than your phone watches?
(02:10):
Well, you know, that's what I dofor the day job and then when I
go to the bar later and I'm trying to, you know.
So with that deal, Barclays was involved.
Final one, restaurant brands shortened to RBI formed a joint
venture with Beijing based CPE, which will invest $350 million
(02:32):
and take an 83% control of Burger King China to accelerate
their openings. McDonald's at Burger King.
Piers. At McDonald's, OK all day that.
Full. Full most.
Overrated Burger King's the mostoverrated fast food restaurant
(02:52):
on the planet. OK, Shrug, Burger King.
I'm sure you're going to get a lot of disgruntled comments on
this video now. So part of that is a recent
momentum including a 10 1/2 percent same store sales growth
and new marketing around the Whopper and crisper.
Have you had a crisper? A Burger King?
I've never heard of a crisper. Well, you've you know your next
stop needs to be in South Korea then, because that's their new
(03:15):
lineup of chicken burgers, of course.
Do you like South Korean chick crispy chicken mice?
Yeah. OK.
Very popular so Morgan Stanley was advising RBI but as I said
our deep dive deal of the week. Shares of Mitzira fell over 15%
one five in early trading last week, with weight loss drug
(03:37):
developer accepting A sweetened offer from Pfizer to end a
fierce bidding war between pharma giant and Danish rival
Novo Nordisk. So this deal then perhaps we
could just look at some of the headlines, talk about some of
the strategy, what's behind thismove?
Yeah, it's a great story becauselike you've got two big
(03:58):
heavyweights kind of just slugging it out, a proper
straight up bidding war. You kind of very rarely get
these. And so it's actually just quite
good fun, like on the sidelines watching it happen.
So this is Pfizer, you know, squaring up against Novo and and
obviously, you know, there's so many interesting themes here.
(04:21):
Obviously, you know, we talk about the AI thing, we're kind
of in healthcare, It's obviouslyweight loss, right?
The weight loss drug is like thethe big kind of future kind of
demand cake that everyone wants to try and get a piece of.
And so that's why Mezira here iskind of caught in this bidding
(04:43):
war between these two giants. So Pfizer, I mean, have been
forced to stump up more cash andthe final sort of agreement,
basically, we'll get into the details in a minute, but it's
basically $10 billion on valuation.
But Pfizer were hoping to pay a lot less than that and
(05:06):
unfortunately had to dip into their pocket.
Just before we kind of get into the details.
I thought it was quite interesting to think about.
Well, who are who are these two giants of the healthcare
industry? You know, how big are they,
Pfizer, Novo Nordisk, how big are they compared to each other?
And actually where? Here's a pop quiz for you.
Here's a question that you weren't expecting.
(05:29):
Where who's bigger first of all,do you think?
Well, my intuition would say Pfizer, but because I go to
Pfizer first, I'm going to say Novo Nordisk.
You, you are correct. That's the kind of what that was
the same. I had exactly the same thought.
I thought our Pfizer's going to be bigger, but but it's not
actually so. And where where do you think
(05:51):
actually Pfizer's not even in the top ten of global
pharmaceutical companies, They're actually. 11th OK, yeah,
that's really. Surprised me Novo Nordisk is
sits at #8. So I'm assuming Pfizer has been
on a declining pattern then? Well, yeah, but so is Novo
Nordisk. So this is an interesting part
of the story because really, both of them, Well, no.
(06:15):
So Pfizer had a massive COVID boom, right?
So they're one of the vaccines. They hugely kind of benefited
from that COVID situation. Ever since then, obviously, the
COVID thing has gone away. Ever since then, they've been
trying to get into this weight loss drug game, but all of their
attempts have failed. So all of the tests they've had
(06:39):
on any drug prototypes that they've been developing has
basically failed. Hence why they're saying, all
right, well, we we've tried it organically.
Let's just go out and buy into this game, shall we?
OK. Novo Nordisks.
They're kind of, yeah, I would say less beneficial of COVID,
(06:59):
but their valuations are halved over the last 2-3 years.
And actually this is about the weight loss drug.
So they were one of the real, you know, the early sort of
winners of of this kind of weight loss situation.
So you'll have heard of Wugovi and Osempic, all right, That's
their kind of novos like cruel crown jewels, OK.
(07:23):
And so their valuation got really pumped, let's say 2223.
But ever since then it's halved.And that's because actually the
demand and it kind of again, thinking about AI and trying to
predict future demand. It's the same with this future
demand has turned out to be a little bit underwhelming.
(07:43):
And so Novo's cap market caps halved like in the last few
years as a result of this. Now, I don't know whether that
means the Novo CEO is just angrybecause I don't know what he was
doing here, but I wonder if he was just meddling because Pfizer
back in September agreed a deal with Matsira.
(08:07):
They agreed terms and the deal was valued at 7.3 billion,
right? No vote.
Then obviously kind of were alerted to this because Pfizer
hasn't been in this weight loss drug game.
So they're threatened by it. So they just go, well, is she
right? Fine.
Then there's no way we're going to let you buy net zero for 7.3
(08:30):
billion. We're either going to try and
buy them ourselves or at the very least we're just going to
force you to pay a lot more money.
I actually think maybe it's the latter here, but so Novo, so
remember September deal agreed, right?
Merger agreement agreed, 7.3 billion.
October Novo come in and go, right?
We're bidding 8 1/2 billion. It wasn't there that wasn't
(08:53):
there a moment when the CEO of Novo was like, giving it the big
one. Yeah, well, he was up the White
House just for something else. And like, obviously you do a bit
of a press piece. So he stepped on the mic and he
got asked about the Pfizer deal and he and he said Novo's bid 8
1/2 billion is higher. And he tells Pfizer to put its
(09:15):
hand in its pocket and bid higher.
Which is why I'm saying, I wonder if he was just kind of
meddling. They're just kind of bidding to
force Pfizer to actually end up paying more.
But anyway, right, He bid 8 1/2.Pfizer then said, hang on, you
can't do that. This violates antitrust laws.
This is reckless. It's kind of an unprecedented
type of approach. Pfizer actually then thought
(09:35):
about suing Novo and Metzira, which couldn't have been great
for the relationship. Anyway.
It then turns out that Pfizer go, oh God, all right, fine,
we'll bid some more. So they then bid up to 8.1
billion and they didn't go to the 8 1/2 billion that Nova went
(09:57):
to. And that's because there's some
regulatory risk with the Novo deal because Novo already have a
big slice of that weight loss drug sort of economy.
It's like, well, the regulator and the antitrust people, we'll
be all over that. And so there's there's much more
regulatory risk with no vote buying MIT sera than Pfizer
(10:20):
because Pfizer aren't in the weight loss game.
So because of that Pfizer is saying, well look Nova is 8 1/2
billion bid. You know, our 8.1 billion was
lower in monetary terms is actually a better bit because
there's much less regulatory risk.
Is on the regular regulatory risk?
Is there anything to be said forthe fact that one company is US
(10:42):
and one company's European? I mean, it's a good question.
Are you always going to, if it'sa, you know, make a choice, pick
your side and you're going to gowith your domestic firm or have
preferential treatment? That, that, that that is true.
(11:03):
Yeah. I mean, but these are such
global businesses, you're going to get regulatory scrutiny from
lots of different jurisdictions.But yeah, what your Yeah, your
home team player is going to gethome advantage, right?
You would have thought so. Anyway, Pfizer bid 8.1.
All right, so Novo said, all right, well, we'll see your 8.1,
we'll raise you to 10. So he'd bid 10, Billy hit.
(11:26):
And then basically Pfizer was like, oh, this is so annoying.
Fine, we'll bid 10 as well. And then at that point, Novo
just pulled out of the race. And I just wonder.
Oh, Mikey. Mikey is just absolutely busted.
He has played a perfect hat hereand kind of folded at the right
(11:47):
time. Anyway, Pfizer's having to stump
up 10 billion when they originally had agreed terms at
7.3. This is a little bit painful,
but if we look at the structure of the deal, it's actually not
ten billion, it might become 10 billion.
And So what they've bid. So at the 10 billion valuation,
(12:07):
that's 86.25 dollars per share, right?
The deals going to go like this 65 point $6 per share cash.
That's your kind of purchase price day one.
The rest, which is another, another 20.65 dollars per share
gets wrapped up in what's calleda contingent value, right?
(12:30):
OK, ACVR, All right. This is basically an IOU that
only pays out if certain future events happen.
It's like an earn out. OK, so it could be that Pfizer,
yes, they do end up paying 10 billion, but actually they might
not. And really it depends on the
success of net zero's weight loss drugs because whilst
(12:54):
they've got their main one at the moment, you've got to inject
yourself once a month. Now the once a month thing is
good, it's less frequent. So that's why it's one of the
popular ones, but they've got a couple of oral kind of in
tablets coming that's in testingand it's it's nearing the first
(13:16):
in human testing, right? Because basically what people
are saying, who's going to win this weight loss game in the
end, you need something, you just need a pill you're going to
swallow. Anybody can nail that more fact.
They're going to be, you know, looking really interesting in
this race, so. Yeah.
Just to just to add with the CVRSI was just kind of curious,
I just had a quick look. So these contingent value rights
(13:38):
CVRS, they're not common in M&A deals.
And the rough estimate is less than 5% of all M&A deals use as
CVR, according to most industry estimates, most common biotech
and pharma deals because of FDA approval, clinical trial
processes and so on. That's right.
The hurdles just way higher, youknow, in the end, your product
(14:02):
is drugs that human beings ingest.
So the, the risks of not gettingit right are absolutely the
highest, highest, highest, highest, right.
So therefore, you know, obviously the regulatory
approval system is just a much bigger minefield.
So that's why yes, on paper. So Metzira have got their their
(14:25):
GLP ones, right? And they've got 2 oral GLP one
candidates coming down the track.
It might be they fail. Now Pfizer knows all too well
about this. They've been trying to
organically create their weight loss drug themselves and it's
failed at the testing phases, right?
So the value of the Matsira business hinges on the success
(14:50):
of the outcome of these two particular oral tablets, right?
So that's why you've got this urn out.
I mean, sure, if these tablets pass and like they're into
production and well, hey, let's go.
Well then, all right, 10 billions of steel, OK, But if
they don't, well, all right, they're not going to pay the
full 10. But Even so, what they end up
(15:11):
paying, I can't do the maths that quickly, but it'd be around
about 7, actually probably 7, around about 7 billion.
That'll probably be expensive, right?
They'll have overpaid. So it's quite a binary situation
here. And that's why you get these
structures that occur in in the kind of healthcare deals, which
is unusual in in most other sectors.
(15:32):
And just just for awareness, City were the financial advisor
to Pfizer, Goldman's Guggenheim Securities, Bank of America were
for Metzira. Maybe to conclude then on this
one, just to recap sort of two points.
What why do a bidding war like what's strategic gain of going
(15:53):
into a bidding war for how you've described it, it just
sounds like don't do that because it's you know, it's just
going to cause problems on on both ends going into that tit
for tat kind of game. And then maybe to wrap up with
some just overall top level strategic themes to take away
for anyone thinking about this as a deal to articulate.
When you've got a prized asset in MIT Sierra, you know, it's
(16:17):
such a if, if I was oral tabletspass.
I mean, there's a goldmine, right?
And it's such a difficult game and it's such a long.
So this is mainly against the back of pharmaceutical sector
specifically. It's such a long road to develop
(16:37):
a drug, get it through all the testing and then get it out to
the mass market, don't forget. So you've got a whole
manufacturing and distribution and logistical kind of headache
as well. It takes years and years and
years and years, right? So when something comes up
where, OK, you've got a smaller player who seemed to have
(16:57):
cracked it in this particular niche.
Well, therefore the big guys andparticularly Pfizer have kind of
missed out on this weight loss thing.
It's like becomes this is this is our way of buying into this
race. Now for Novo, again, we don't
know, maybe they did want to buyit as well because all right,
(17:18):
just add it to what they've already got and become a
dominant player in the weight loss space.
I mean, great strategically thatwould make sense.
But at the very worst, they've just made one of their key
rivals spend an extra 2.7 billion that they didn't want to
spend. So that's great for their for
(17:40):
Novo and their rival because then Pfizer got less money to
spend on other stuff like developing new trucks, for
example. OK.
So it just kind of puts the handbrake on one of your rivals.
So, so for Novo, this is great. I mean, fine, all right, They
didn't get the company, but they're already in that space.
(18:00):
So worst case, they'll just put a handbrake on Pfizer.
They'll be pretty happy about that.
All right, well, to wrap up, like we always try and do with
these deals, just to make it a nice off the shelf take away if
you'd like as to things that have been covered in the
conversation. So #1 obesity drugs is a growing
and promising industry. I mean, you've talked about it.
(18:21):
It's like the AI version within this healthcare space.
So very large addressable opportunity by early next
decade. So it's going to continue to
draw sustained big pharma investor focus #1 #2 buy
overbuild, just as you describedthe path for Pfizer.
(18:42):
So this is about then utilizing what Pfizer does have, which is
global clinical manufacturing, commercial footprint.
It's like buy and build, use your existing infrastructure
ecosystem to just get hold and then distribute and then #3
regulatory advantages. A real deal closes.
In this case, an FTC core warnedof risks in Novo Nordics
(19:05):
proposed structure. Well, Pfizer stated this path
had FTC approval. And so just push through and
before you mentioned, and we've covered contingent value rights,
CVRS used as a hedge of deal risk.
And then #5 which I guess is something to just consider,
which is the other external risks outside of the control of
(19:28):
these companies and their drugs,which is the government and
policy and law, which is the commercial environment for
obesity drugs is changing prettyfast.
One of the recent things that we've just had is a new White
House backed pricing framework, which sets lower than expected
price anchors for some of these obesity drugs.
(19:49):
So again, capping the overall potential of this huge market
opportunity. All right, Well, look, we'll
wrap it up there short and sharp.
So hopefully a useful conversation nonetheless, if
there's any particular deals that you see after listening to
this that you would like us to cover.
We'll record them generally at the end of the week and then put
(20:11):
them out at the beginning of thefollowing week.
So put in your bidding for what stories you'd like us to cover.
Anything on the M and A deal front.
We'll be doing our own anyway and we'd love to have you take
part. So shout out finally to our
researcher SARP, as always, for putting this stuff together for
us. So take care and have a great
week ahead. All the best.
(20:33):
Thanks a lot.
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