Novartis agrees $8.7bn AveXis deal
June 2018 | DEALFRONT | MERGERS & ACQUISITIONS
Financier Worldwide Magazine
June 2018 Issue
In a deal that is expected to enhance its status as a gene therapy and neuroscience company leader, Swiss multinational pharmaceutical company Novartis International has entered into an agreement and plan of merger with US-based AveXis, Inc., pursuant to which Novartis will acquire AveXis.
Under the terms of the agreement, Novartis has formed an acquisition subsidiary, Novartis AM Merger Corporation, which will commence a tender offer to purchase all outstanding shares of AveXis for $218 per share in cash or a total of $8.7bn in cash. Should Novartis elect to extend the outside date of the offer, the price will increase from $218 per share to $225 per share in cash.
Unanimously approved by the board of directors of both companies, the transaction is expected to be completed in mid-2018. Until then, AveXis will continue to operate as a separate and independent company.
The merger agreement includes customary termination provisions for both AveXis and Novartis, including a right for either party to terminate if the transaction has not been completed by 6 July 2018. Furthermore, the merger agreement provides that, should AveXis accept a superior proposal, the firm will be required to pay Novartis a fee of $284m.
The merger agreement also provides that, in connection with any termination of the merger agreement under specified antitrust related circumstances, Novartis will be required to pay to AveXis a “reverse termination fee” of $437m, which increases in the event Novartis elects to extend the outside date in accordance with the terms of the merger agreement.
For its part, Novartis plans a smooth transition of AveXis operations and the integration of AveXis’ talented and dedicated employees into the Novartis organisation, to continue the mission of bringing AVXS-101 – AveXis’ gene therapy currently in development for the treatment of spinal muscular atrophy – to patients worldwide.
Providing innovative healthcare solutions that address the evolving needs of patients and societies, Novartis offers a diversified portfolio to meet these needs, which includes innovative medicines, cost-saving generic and biosimilar pharmaceuticals, and eye care. The company’s products are sold in approximately 155 countries around the world. Novartis target AveXis is a clinical-stage gene therapy company, dedicated to developing and commercialising novel treatments for patients suffering from rare and life-threatening neurological genetic diseases.
“The commitment, drive and expertise of the entire AveXis team has created significant stockholder value,” said Sean Nolan, president and chief executive of AveXis. “We are pleased that Novartis recognises that value in our manufacturing capabilities and our gene therapy pipeline, all of which serve to transform the lives of people devastated by rare and life threatening neurological diseases.”
The tender offer and the merger are subject to customary closing conditions, including the tender of at least a majority of outstanding AveXis shares on a fully diluted basis and the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.
Acting as AveXis’ financial advisers for the offer are Goldman Sachs & Co. LLC and Centerview Partners LLC, while Cravath, Swaine and Moore LLP and Cooley LLP are acting as legal counsel. For Novartis AM Merger Corporation, Innisfree M&A Incorporated is acting as information agent and American Stock Transfer & Trust Company, LLC is acting as the depositary and paying agent.
Mr Nolan concluded: “With worldwide reach and extensive resources, Novartis should expedite our shared vision of bringing gene therapy to these patient communities across the globe as quickly and safely as possible.”
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