Alkermes Wins Bidding War for Avadel with $2.1B Deal
A revised $22.50 per share offer from Alkermes edged out a competing proposal from H. Lundbeck A/S, concluding a dramatic takeover battle for the narcolepsy drugmaker.
A high-stakes bidding war for Avadel Pharmaceuticals (NASDAQ: AVDL) has concluded, with Alkermes plc emerging as the victor after sweetening its offer to approximately $2.1 billion. The revised deal, valued at up to $22.50 per share, successfully countered a rival bid from Danish drugmaker H. Lundbeck A/S and secured the approval of Avadel's board.
The agreement brings to a close a month of intense negotiations that saw Avadel become a coveted target in the pharmaceutical sector. Shares of Avadel were active, trading at $21.54, just above the $21.00 cash portion of the offer, as the market priced in the deal's near-certainty and the potential value of future milestone payments.
The takeover drama began in October when Alkermes and Avadel first agreed to a deal valued at up to $20.00 per share. However, the situation was upended in mid-November when Lundbeck made an unsolicited proposal of up to $23.00 per share. Avadel's board subsequently deemed Lundbeck's offer a “Company Superior Proposal,” forcing Alkermes back to the negotiating table.
In response, Alkermes presented an improved offer that ultimately won Avadel back. The final terms announced by Alkermes consist of $21.00 in cash per share plus a non-transferable Contingent Value Right (CVR) of up to $1.50 per share. This CVR is tied to the future success of Avadel’s key drug, LUMRYZ. Following the revised Alkermes offer, Lundbeck announced it would not increase its bid, effectively bowing out of the contest.
The intense bidding process spurred significant activity among institutional investors. A series of Form 8.3 filings appeared on the London Stock Exchange, a requirement under Irish takeover rules for parties holding an interest of 1% or more. Filings from major financial institutions like Bank of America Merrill Lynch signaled that Wall Street was actively positioning itself to capitalize on the takeover arbitrage. Data shows institutional ownership in Avadel stands at a commanding 94.6%, and all 10 analysts covering the stock now rate it a 'Hold', suggesting a consensus that the shares are now fully valued pending the acquisition's close.
The centerpiece of the acquisition is Avadel's primary asset, LUMRYZ, a once-at-bedtime formulation for treating cataplexy or excessive daytime sleepiness in adults with narcolepsy. The drug's commercial potential is the key driver behind the competitive bids. The CVR component of Alkermes' offer is contingent on the potential label expansion of LUMRYZ for idiopathic hypersomnia, a related sleep disorder, adding a future growth catalyst to the deal's value.
Avadel's stock has seen a remarkable ascent over the past year, rising from a 52-week low of $6.38 to a high of $23.57, largely fueled by the takeover speculation. The final acquisition price of up to $22.50 per share represents a substantial premium for shareholders and reflects the strategic value of Avadel’s position in the sleep medicine market.