Freshfields Leads on Merck’s $10bn Acquisition of Verona Pharma
WHAT IS HAPPENING?
Freshfields is advising US pharmaceutical giant Merck & Co. on its $10 bn acquisition of London-based Verona Pharma, marking a major step in Merck’s strategy to secure new revenue streams before the patent on its blockbuster cancer drug Keytruda begins to expire in 2028.
Verona’s key asset, Ohtuvayre, a treatment for chronic obstructive pulmonary disease (COPD), was recently FDA-approved, and Merck expects it to bring in multibillion-dollar annual revenue by the mid-2030s. The deal values Verona at $107 per American Depository Share, a 23% premium to its last Nasdaq closing price.
WHY THIS DEAL MATTERS
Freshfields US Expansion Is Working: This is a significant win for Freshfields US M&A practice, which has aggressively expanded by hiring elite laterals from top US firms like Cravath.
Strategic Pharma Move: The acquisition gives Merck a promising new respiratory drug as it braces for post-Keytruda life.
M&A Rankings Shift: Freshfields is now consistently ranked in the global top 10 by deal value, overtaking some major US rivals and all other UK Magic Circle firms.
THE KEY PLAYERS
Merck & Co. - Acquirer, one of the world’s largest pharmaceutical companies.
Verona Pharma - Target company, based in London, with shares listed on Nasdaq.
Damien Zoubek & Jenny Hochenberg - Freshfields corporate partners leading the deal from New York; both ex-Cravath hires.
Peter Handrinos - a Latham & Watkins partner advising Verona, has advised the company on multiple financings since 2020.
LAW FIRMS INVOLVED
Freshfields advising Merck
Latham & Watkins advising Verona Pharma
Citi & Morgan Stanley - Financial advisors to Merck
Centerview Partners - Exclusive financial advisor to Verona
PRACTICE AREAS IN ACTION
Corporate / M& - Core to deal execution, negotiation of the share purchase agreement (SPA), and overall transaction structure.
Capital markets - Verona is Nasdaq-listed, so the deal involves share price analysis disclosure obligations and regulatory filings with the SEC.
Life Sciences & Regulatory - Essential for ensuring compliance with drug approval regulations, particularly regarding Ohtuvayre.
Antitrust/ Competition - Potential scrutiny in multiple jurisdictions given the size and pharma sector overlap.
Employment & Incentives - Verona’s employee benefits, share plans, and retention schemes must be reviewed and aligned with post-acquisitions.
LEGAL AND COMMERCIAL ISSUES
Legal Considerations:
Cross-border complexity: This is a UK/US transaction involving multiple legal systems, securities regulations, and listing rules.
Due diligence: Legal teams must carefully examine Verona’s IP portfolio, financials, clinical trial liabilities, and compliance history.
Intellectual property: Securing ownership of patents for Ohtuvayre is key. Any disputes or lapses could derail the deal.
Commercial Drivers:
Revenue protection: Merck is preparing for the patent expiry of Keytruda by investing in a drug with significant long-term revenue potential.
First-mover advantage: Ohtuvayre’s recent FDA approval makes it highly attractive. Acquiring Verona before competitors move in is a strategic win.
Premium pricing: The 23% premium indicates confidence but also carries risk. The legal team must ensure the valuation is justified and defensible.
TRAINEES’ TAKEAWAYS - WHAT DO TRAINEES DO ON A CASE LIKE THIS?
This kind of high-profile, cross-border transaction offers incredible learning opportunities for trainees. Here’s what you might be involved in:
Due Diligence
Reviewing commercial contracts, clinical trial documents, litigation risks, and regulatory compliance.
Flagging “red flags” or issues for senior lawyers to raise with the client.
Document Drafting & Support
Preparing board minutes, shareholder resolutions, and disclosure letters.
Assisting with ancillary agreements and corporate authorisations.
Data Room & Deal Management
Uploading and organising documents in the virtual data room
Maintaining transaction bibles and closing checklists.
Multi-Jurisdictional Coordination
Working with overseas offices to align on local requirements.
Helping schedule meetings and translating legal advice across time zones.
Commercial Awareness
Understanding how regulatory approvals impact deal value.
Learning why pharma M&A revolves around IP, R&D pipelines, and patent cliffs.
Legal Lingo
SPA (Share Purchase Agreement)
The main contract in an acquisition, setting out the terms for the buyer to acquire shares in the target company. It covers price, warranties, indemnities, and closing mechanics.
AND MORE…
Inspired by LittleLaw, and this provides the ability to think about every aspect of the Deal or Dispute - https://littlelaw.co.uk/
Want to learn DRIVING - https://linktr.ee/meerdrivinginstructor
New to Clear? Don’t Miss Out! 📬 |
Subscribe now to stay in the loop with the latest commercial insights and top headlines delivered straight to your inbox. Stay informed, stay ahead! 🌟 |
Thank you for reading 😄