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Is Merck's Planned Acquisition of Acceleron in Trouble?

By Keith Speights and Brian Orelli, PhD – Nov 12, 2021 at 7:31AM

Key Points

  • Merck temporarily withdrew a key regulatory filing document related to its planned buyout of Acceleron.
  • The company made this move to give the FTC more time to complete its review of the deal.
  • The planned acquisition looks like a smart transaction for the company.

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There's nothing to worry about with a recent delay.

In September, Merck (MRK -3.29%) announced plans to acquire Acceleron Pharma (XLRN) for $11.5 billion. However, the big drugmaker recently revealed that it withdrew a key regulatory filing document related to the transaction. In this Motley Fool Live video recorded on Nov. 3, 2021, Motley Fool contributors Keith Speights and Brian Orelli discuss why Merck's move doesn't mean that the acquisition of Acceleron is in trouble.

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Keith Speights: Brian, let's move past earnings. Merck revealed late last week that it has temporarily withdrawn its pre-merger notification and report form for the planned acquisition of Acceleron. What's going on with this? Is Merck's buyout of Acceleron in any trouble here?

Brian Orelli: We have to go back to 1976 while I was still in diapers to explain this one. There's a waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, I believe it's 15 days on the FTC needs to act or if it doesn't, then a waiting period expires and the agency can't really do anything. The waiting period was about to expire and the FTC, I guess wasn't done with its review. The press release didn't say this, but I'm assuming that the agency asked nicely for Merck to refile and to give it more time and playing nice with regulators is generally a good move for companies.

Merck isn't going to have a monopoly on the pulmonary arterial hypertension market by acquiring Acceleron, that's it's main drug and so I don't think there's anything for Acceleron shareholders to worry about here. I think the deal is going to go through. The FTC obviously need a little more time and so Merck will be nice instead of them causing a ruckus, either by making the FTC just end it's investigation or accelerate its investigation and then maybe that creates more problems than its worth.

This is probably the shortest way to get the deal done. It's just going to delay when the shareholders get there $180 per share, but the acquisition is still expected to close in this quarter. I don't see it as being a major issue for Merck or for Acceleron.

Speights: Merck is another company that doesn't need to make an acquisition or two because it faces that patent cliff with Keytruda. We talked about this not long ago. I think it's 2028 when the key patents for Keytruda expire and it generates a big chunk of Merck's revenue. Making deals like the one with buying Acceleron is probably smart for Merck.

Orelli: Yeah, definitely. I think it's very good acquisition for Merck and like I said, and I think it's really a major this delay is not a major issue.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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