Pfizer Moves Close to Deals Target With Seagen Buy, Lawyer Says

Pfizer Inc.‘s deal-making goal is close to complete with its planned acquisition of cancer-drug maker Seagen Inc., according to an attorney who worked on the tie-up.

Pfizer Chief Executive Officer Albert Bourla told analysts last year the company planned to add $25 billion in revenue through dealmaking by 2030. The Seagen acquisition announced March 13 moves the company $10 billion closer to that goal, according to Pfizer estimates.

“They’re 85% to 90% of the way to achieve that goal” of $25 billion, said David Lam, a corporate partner at Wachtell, Lipton, Rosen & Katz, which advised Pfizer on the deal. That comes despite a lull in dealmaking. “There haven’t been a lot of large deals in 2023,” Lam said. “It’s been a slow start.”

The Pfizer-Seagen combination, with a $43 billion enterprise value, is the biggest deal so far this year as activity dried up following a 2021 boom. Continued rate hikes by the Fed and liquidity worries driven by banking sector turmoil caused merger and acquisition activity to fall by half in 2023, Bloomberg data shows.

Pfizer is well positioned to acquire companies despite the high interest rates and an unfavorable market, Lam said. That’s because of its cash holdings from sales of Covid vaccines and therapies, he said.

“That is a little bit different than, for example, private equity and for firms that don’t have a lot of cash and are required to leverage their balance sheets to finance transactions,” he said.

Pfizer acquired companies including Global Blood Therapeutics and Biohaven Pharmaceuticals in the previous 12 months.

For Wachtell, the Wall Street firm that was the industry’s most profitable in 2021, based on data from The American Lawyer, the Pfizer deal followed two other recent high-profile representations.

Wachtell represented Twitter Inc. in the company’s push to force Elon Musk to complete a $44 billion acquisition of the company. Indian business tycoon Gautam Adani’s Adani Group hired the firm last year to fight claims of fraud and market manipulation made by short-seller Hindenburg Research.

Pfizer turned to Wachtell both because it had a long-term relationship with the firm and it was “a safe choice,” said Kent Zimmermann, a partner at the Zeughauser Group, who advises law firms.

“For a transaction like this one, that’s transformative for the organizations involved, that moves the share price and moves public perception, you have to get it right, so you go to a safe choice,” Zimmermann said.

Seagen’s Leadership

Seagen in November appointed David R. Epstein as its CEO. Epstein, who spent more than 25 years building out Novartis’s oncology business unit and served as CEO of Novartis Pharmaceuticals, replaced company co-founder Clay Siegall, who stepped down in May last year after he was arrested and charged with domestic abuse.

Wachtell’s team was led by Edward D Herlihy, co-chairman of the executive committee and corporate partners Lam and Zachary Podolsky.

Lam has worked on six deals with Pfizer since 2015.

The first was in Pfizer’s acquisition of Allergan, which was terminated because the US Department of Treasury changed tax rules that were associated with the deal, he said. Since then, he advised on Pfizer’s $48 billion combination of Upjohn and Mylan to form Viatris, and its transaction with GlaxoSmithKline to form Haleon and others.

Pfizer expects many months to complete its acquisition of Seagen, estimating it will complete in late 2023 or early 2024 in anticipation of regulatory approvals.

“There is an awareness that because of the regulatory process, deals can take longer to close than they historically have,” Lam said. “We don’t expect there really are any regulatory roadblocks for this deal to be complete. But it can take longer to get through all the different regulators than it may have taken a couple of years ago.”