The regulatory concerns associated with the potential deal between Merck and Seagen may attract antitrust scrutiny from regulators. 

American multinational pharmaceutical company Merck & Co Inc (NYSE: MRK) is in advanced talks to acquire biotech and drug manufacturing outfit, Seagen Inc (NASDAQ: SGEN). According to the Wall Street Journal (WSJ), the deal is currently valued at about $40 billion as both parties are reportedly negotiating a deal of about $200 a share for Seagen’s stock.

While the Wall Street Journal said both parties are looking to close the deal before Merck announces its second-quarter earnings report scheduled for July 28, sources who spoke to the publication noted that as serious as the negotiations are, a deal may not be reached.

The news of the proposed acquisition has stirred investor sentiment over the shares of Seagen which is now trading at 6.17% in the pre-market to $185.94. Merck’s investors are, however, not as enthusiastic about the move as there is a mild selloff in the Pre-Market.

According to BMO Analysts, the question of whether Seagen has a good product fit in Merck’s long-term plan is not a question, the concern is hinged on heightened regulatory scrutiny. The proposed pursuit to acquire Seagen has been termed as a key move for Merck whose notable cancer drug, Keytruda is on track to lose its market exclusivity come 2028.

Keytruda is Merck’s highest grossing product, raking in as much as $17.2 billion in sales last year. Ahead of the loss of exclusivity, Merck is strategically looking for a new product that will fit its portfolio, and Seagen’s products particularly Adcetris, which had $1.4 billion in sales last year would be a perfect fit.

Sources close to the deal say negotiations have been ongoing for a while, however, the duo of Merck and Seagen have declined to comment on the ongoing talks.

Merck and Seagen Deal: Invitation for Antitrust Probe?

The regulatory concerns associated with the potential deal between Merck and Seagen may attract antitrust scrutiny from regulators.

While Seagen is a relatively smaller biotech company, regulators may seek to know whether Merck is acquiring the firm in a bid to wade off competition in any form. This line of thought is not a new thing as a number of potential buyouts amongst multinationals have attracted a similar probe from authorities around the world.

Earlier this week, Coinspeaker reported that the UK’s Competitive and Markets Authority (CMA) opened a probe into the $69 billion acquisition of gaming giant Activision Blizzard (NASDAQ: ATVI) by Microsoft Corporation (NASDAQ: MSFT) earlier this year. The regulator said it would find out if the acquisition will taper down the competition in the UK as many fear the acquisition will cede exclusive control of key franchises such as Call of Duty and Candy Crush to the American tech giant.

The fear of an anti-competitive probe is speculation for one that is likely, considering the general trend in the US at this time.

Share:

Leave a Reply

Your email address will not be published.