Big pharma deal incoming., page-15

Example of a pharma deal, as described in a SEC filing between Merck and Acceleron.....tonnes of info on M&A in SEC filings when you go look for it. This deal took from end July to October.

Over 75% of all M&A deals in the last few years have been single negotiated parties.....

https://www.sec.gov/Archives/edgar/data/64978/000119312521296484/d202184dex99a1a.htm#toc202184_13

10. Background of the Offer; Past Contacts or Negotiations with Acceleron

Background of the Offer and the Merger

The following is a description of contacts between representatives of Merck and its affiliates and representatives of Acceleron and other persons that resulted in the execution of the Merger Agreement. For a review of Acceleron’s additional activities, please refer to the Schedule 14D-9 that will be filed by Acceleron with the SEC and mailed to stockholders of Acceleron.

From time to time in the ordinary course of business, Merck and Parent evaluate various business opportunities to enhance shareholder value. These evaluations have included periodic assessments of potential strategic transactions to strengthen Merck’s existing business.

On July 16, 2021, Mr. Sunil Patel, senior vice president and head of corporate development at Merck, contacted Mr. Habib Dable, chief executive officer of Acceleron, via email, asking for a call to discuss opportunities for the two companies to work together. Mr. Dable replied that Acceleron was not seeking to out-license any of its assets at that time and shared the contact information of Acceleron’s senior vice president of business development in the event that Merck was looking to out-license its own pulmonary disease assets. Mr. Patel later reiterated his request for a call directly with Mr. Dable.

On July 19, 2021, Messrs. Patel and Dable along with Dr. Dean Li, executive vice president of Merck and president of Merck Research Laboratories, and Kevin McLaughlin, senior vice president and chief financial officer of Acceleron, participated in a call during which Mr. Patel previewed for Messrs. Dable and McLaughlin the contents of a letter Merck would deliver proposing an acquisition of Acceleron at a price of $160 per Share.

On July 20, 2021, Merck submitted to Acceleron a non-binding indication of interest to acquire all of the outstanding shares of Acceleron for $160 per Share in cash (the “July 20 Proposal”). The July 20 Proposal valued Acceleron’s equity at approximately $10.2 billion in total, and as compared to Acceleron’s closing stock price on July 15, 2021 of $115.36, represented a 39% premium and a total equity value premium of approximately $2.9 billion. The July 20 Proposal was subject to the negotiation of a definitive acquisition agreement and satisfactory completion of due diligence, including several items identified in the indication of interest as critical to Merck’s valuation and willingness to proceed, one of which was a review of an unredacted version of Acceleron’s license and collaboration agreement for sotatercept with Celgene Corporation (the “Celgene License”). The July 20 Proposal did not specify any financing condition and indicated that Merck could be in a position to announce a transaction within two weeks following the commencement of due diligence.

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On July 28, 2021, Merck and Acceleron executed a confidentiality agreement, which was limited in application to the unredacted copy of the Celgene License and did not contain a standstill provision. Shortly after execution of the confidentiality agreement, Acceleron shared with Merck an unredacted version of the Celgene License.

On August 5, 2021, Acceleron’s financial advisors provided answers and shared additional information in response to several of Merck’s questions arising from its review.

On August 6, 2021, Mr. Patel from Merck confirmed to Acceleron’s financial advisors that Merck had completed its review of the Celgene License and was satisfied with the results of that review.

On August 9, 2021, following a meeting of the Acceleron Board, Acceleron’s financial advisors contacted Mr. Patel and informed him that Merck’s July 20 Proposal offered insufficient value to Acceleron’s stockholders to justify further engagement by Acceleron.

On August 12, 2021, Merck submitted to Acceleron a revised non-binding indication of interest, which increased the per Share price from $160 per Share to $175 per Share in cash (the “August 12 Proposal”). The revised indication of interest valued Acceleron’s equity at approximately $11.2 billion in total, an increase of $1.0 billion in total from Merck’s previous proposal, and as compared to Acceleron’s closing stock price on July 15, 2021 of $115.36, represented a 51.7% premium and a total equity value premium of approximately $3.9 billion. The August 12 Proposal indicated that Merck’s executive committee had been actively involved in evaluating the potential transaction and continued to be supportive of a transaction, subject to completion of due diligence and approval by Merck’s board of directors.

On August 17, 2021, Acceleron and Merck executed a revised confidentiality agreement, which amended and restated the confidentiality agreement previously entered into by the parties on July 28, 2021 and which contained a standstill provision that would terminate upon the public announcement of the execution of a definitive agreement for a change in control transaction. Thereafter, beginning on August 23, 2021 and continuing through September 7, 2021, members of Merck’s team attended a series of technical presentations and due diligence meetings held by members of Acceleron’s management team, at which representatives from Merck asked questions regarding Acceleron’s business, and members of Acceleron’s management team responded. Acceleron also made available to Merck a virtual data room (the “Data Room”) to facilitate Merck’s technical due diligence investigation.

Following the completion of Merck’s technical due diligence on September 7, 2021, Acceleron’s financial advisors informed Merck that it should submit its “best and final” proposal by September 13, 2021.

On September 13, 2021, Merck submitted its “best and final” proposal to acquire Acceleron for $180 per Share in cash. The proposal valued Acceleron’s equity at approximately $11.5 billion in total, and as compared to Acceleron’s closing stock price on July 15, 2021 of $115.36, represented a 56% premium and a total equity value premium of approximately $4.2 billion to Acceleron’s closing stock price on July 15, 2021. On a call with Mr. Dable in advance of submitting the written proposal, Mr. Robert M. Davis, chief executive officer and president of Merck, noted to Mr. Dable that $180 per Share was Merck’s best and final price. Merck confirmed the proposal in writing the following day.

Beginning on September 14, 2021, and continuing through September 29, 2021, members of Merck’s team participated in a series of confirmatory due diligence meetings held by members of Acceleron’s management team, at which representatives from Merck asked questions regarding Acceleron’s business, and members of Acceleron’s management team responded. Acceleron also expanded Merck’s access to the Data Room to facilitate Merck’s confirmatory due diligence investigation.

On September 14, 2021, Ropes & Gray LLP (“Ropes & Gray”), legal advisor to Acceleron sent to Covington & Burling LLP (“Covington”), legal advisor to Merck, an initial draft of the merger agreement. The draft merger

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agreement provided for, among other things: (i) a tender offer, followed by a back-end merger if the tender offer is successful; (ii) a “no-shop” provision with a fiduciary out; (iii) Merck’s commitment to take all actions necessary to obtain any approvals required under applicable antitrust laws, including divesting any of Merck’s or its subsidiaries’ assets; (iv) a “company material adverse effect” standard for Merck’s obligation to close the transaction with various exclusions from the events that could constitute a “material adverse effect”; and (v) a termination fee in an amount equal to 2.0% of Acceleron’s enterprise value payable by Acceleron to Merck in the event that Acceleron were to terminate the merger agreement to accept a superior proposal and in certain other circumstances.

On September 18, 2021, Covington sent to Ropes & Gray a proposed revised draft of the Merger Agreement, which, among other things: (i) removed the requirement for Merck to take all actions necessary to obtain any approvals required under applicable antitrust laws, and instead provided that Merck would not be obligated to take certain affirmative actions in respect of obtaining regulatory approvals; (ii) proposed a termination fee in an amount equal to 3.5% of equity value; and (iii) limited the proposed exclusions from the definition of “company material adverse effect.” Also on September 18, 2021, Ropes & Gray sent to Covington an initial draft of the disclosure letter that would accompany a merger agreement.

Between September 18, 2021 and September 29, 2021, Ropes & Gray and Covington, on behalf of and with the involvement of their respective clients, further negotiated the terms of the Merger Agreement and the contents of the corresponding disclosure letter.

On September 24, 2021, Bloomberg published an article reporting that Acceleron was in discussions to be acquired for $180 per Share, representing $11.5 billion in total equity value. On September 27, 2021, The Wall Street Journal published an article confirming the Bloomberg report and further reporting that Merck was the party in discussions with Acceleron.

On the evening of September 28, 2021, Mr. Dable contacted Mr. Davis regarding the market reaction to rumors regarding the proposed transaction and requested that Merck increase its offer, and Mr. Davis declined to do so.

On the morning of September 29, 2021, Ropes & Gray and Covington finalized negotiation of the Merger Agreement containing the terms described in Section 11—“The Merger Agreement; Other Agreements—The Offer.”

On September 29, 2021, Parent, Purchaser and Acceleron executed and delivered the Merger Agreement.

On the morning of September 30, 2021, prior to the opening of trading of shares of Acceleron’s common stock on Nasdaq, Merck and Acceleron issued a joint press release announcing the execution of the Merger Agreement.

On October 12, 2021, Purchaser commenced the Offer.