On Saturday, Novo Nordisk (NVO) ended its plans to buy out Metsera (MTSR). Metsera has obesity drugs in the pipeline and is pre-revenue.
Novo will let Pfizer (PFE) overpay for Metsera in a deal worth up to $10 billion. The firm said that it agreed to a merger bid from Pfizer. Pfizer will pay $86.25 a share in cash. In September, Pfizer agreed to pay $47.50 a share ($4.9 billion), plus $22.50 a share in contingent value rights. Those CVRs are contingent on the firm meeting future milestones.
Novo played the bidding war well. It forced Pfizer to pay double the price. Moreover, Metsera does not need to meet any performance obligations.
What Happens Next
Novo shares did not perform well since peaking in 2024 at around $150. The stock failed to break out of a $55 - $60 resistance zone. Once it fell below $50, it closed on Nov. 8 at $45.68.
NVO stock is inexpensive. Its price/earnings ratio is 13.3 times and is attractive at current levels. Pfizer, however, is a troubling, high-risk holding. The firm has a history of overpaying for acquisitions, writing down much of its investment later on.
Pfizer could have waited for regulators to deny Novo of its bid, citing foreign ownership. Instead, it doubled its bid. At a 14.2 times P/E, PFE stock risks falling to the $20.00 level as investor fears on its future mount.
