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DUBLIN - Alkermes plc (NASDAQ:ALKS) has increased its offer to acquire Avadel Pharmaceuticals plc (NASDAQ:AVDL) to $21.00 per share in cash plus one contingent value right (CVR) worth up to $1.50 per share, the companies announced Wednesday. According to InvestingPro data, Alkermes is well-positioned for this acquisition with a strong balance sheet showing more cash than debt and a healthy current ratio of 3.67.
The revised offer, which values Avadel at approximately $2.37 billion assuming the milestone payment is made, comes after Avadel received an unsolicited proposal from H. Lundbeck A/S on November 14. With Alkermes' market capitalization of $4.83 billion and robust free cash flow of $490.87 million over the last twelve months, the company appears financially capable of executing this significant transaction.
The cash component of the offer matches Lundbeck's proposal, but Avadel's board determined that Alkermes' CVR terms are superior to Lundbeck's, which they considered "unlikely to be achieved." The CVR payment is contingent upon FDA approval of LUMRYZ for idiopathic hypersomnia in adults by the end of 2028.
The transaction, approved by both companies' boards of directors, is expected to close in the first quarter of 2026, subject to regulatory approvals and other closing conditions.
As part of the revised agreement, Alkermes has agreed to take all necessary steps to obtain antitrust clearances, including potential divestitures if required. The company has also extended the end date from nine to twelve months, with a possible extension to fifteen months under certain circumstances.
Avadel's board of directors unanimously recommends that shareholders vote in favor of the transaction. The board members who hold Avadel shares, representing approximately 4.4 million shares, intend to vote their holdings in favor of the deal.
J.P. Morgan is acting as financial advisor to Alkermes and has provided fully committed financing for the transaction. Morgan Stanley and Goldman Sachs are serving as financial advisors to Avadel.
The acquisition will be implemented through a High Court of Ireland-sanctioned scheme of arrangement, with a definitive proxy statement expected to be filed with the SEC and distributed to Avadel shareholders in due course.
The announcement follows Avadel's October 22 agreement to be acquired by Alkermes for $18.50 in cash plus a $1.50 CVR, which has now been increased following the competing proposal from Lundbeck.
In other recent news, Avadel Pharmaceuticals announced it received an unsolicited acquisition proposal from H. Lundbeck A/S, valuing the company at up to $23.00 per share. This offer, which includes $21.00 per share in cash and a contingent value right of up to $2.00, values Avadel at approximately $2.4 billion. Avadel's board has deemed this a "Superior Proposal" compared to its existing agreement with Alkermes. In response, Alkermes acknowledged the potential rival bid and is currently evaluating its options. Meanwhile, Truist Securities raised its price target for Alkermes to $55.00, maintaining a Buy rating, following positive trial data from its alixorexton program. This development is seen as a significant de-risking event, prompting an upward revision in estimates. These recent developments highlight a potential bidding situation between Lundbeck and Alkermes over Avadel.
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