Board Sees Lundbeck’s Offer as Potentially Superior: Key Details for Shareholders
Avadel Pharmaceuticals plc (NASDAQ: AVDL) has landed in the spotlight following an unsolicited proposal from H. Lundbeck A/S to acquire the company for up to $23.00 per share. This offer arrives on the heels of an already announced transaction with Alkermes plc, stirring new considerations for Avadel’s shareholders.
Competing Offers Create Decision Point for Avadel
Lundbeck’s proposal values Avadel at $21.00 in cash at closing, plus a non-transferable contingent value right (CVR) of up to $2.00 per share based on sales milestones for LUMRYZ™ and valiloxybate in the U.S. market. Specifically, an additional $1.00 per share would be paid if these drugs reach $450 million in U.S. annual net sales by the end of 2027, and another $1.00 if sales hit $700 million by the end of 2030.
Here’s a quick comparison of the two proposals currently on the table:
| Bidder | Cash at Closing (per share) | CVR Potential (per share) | Total Potential Value (per share) | Milestone Details |
|---|---|---|---|---|
| Lundbeck | $21.00 | $2.00 | $23.00 | $1.00 for $450M sales by 2027; $1.00 for $700M sales by 2030 |
| Alkermes | $18.50 | $1.50 | $20.00 | $1.50 for FDA approval of LUMRYZ™ for idiopathic hypersomnia by 2028 |
What’s Next? Board Allows Negotiations But No Final Decisions Yet
The Avadel Board of Directors has determined that the Lundbeck proposal is “reasonably expected to result in a ‘Company Superior Proposal’,” a key distinction that now permits the company to negotiate and provide information to Lundbeck. However, the Board has not yet declared Lundbeck’s bid superior nor recommended terminating the Alkermes agreement.
Importantly, under the terms with Alkermes, Avadel cannot simply walk away or strike a new deal without following formal procedures. The window for Lundbeck to solidify its intentions is also defined—Lundbeck must make a formal bid or withdraw prior to the general shareholder meeting convened to approve the Alkermes acquisition.
Why the Offers Matter: Comparing CVRs and Upside Potential
Lundbeck’s CVR offers the prospect of higher value but relies on achieving significant sales milestones over several years. In contrast, Alkermes’ offer presents a lower cash and CVR total, but its CVR milestone—FDA approval for a new indication—may be more straightforward to evaluate. Shareholders are now faced with weighing certainty of cash versus the risk and upside tied to future performance.
The table below summarizes these milestones:
| Offer | Milestone Type | Deadline | Amount |
|---|---|---|---|
| Lundbeck | US Sales ($450M, $700M) | 12/31/2027; 12/31/2030 | $1.00 each |
| Alkermes | FDA Approval for LUMRYZ™ (Idiopathic Hypersomnia) | End of 2028 | $1.50 |
What Should Investors Watch Next?
No immediate action is required from shareholders. The Avadel Board continues to recommend the Alkermes deal but is formally evaluating the Lundbeck proposal. By rule, any change—whether it’s accepting Lundbeck’s proposal or sticking with Alkermes—will be accompanied by new communications and voting processes.
For those watching this deal unfold, the focus should be on:
- The formal response of Lundbeck ahead of the shareholder vote on the Alkermes agreement.
- Regulatory and shareholder approvals for either transaction.
- The structure and achievability of CVR milestones, which may tip the balance of value.
Takeaway: Multiple Offers Add Value—and Uncertainty—for Avadel Holders
With two active bids on the table, Avadel’s future—and the ultimate payoff for shareholders—hinges on how these negotiations evolve. Both proposals provide clear metrics for total consideration, but differ significantly in risk, timing, and potential upside. Investors would do well to monitor updates from Avadel’s Board and stay attuned to both offer details as this competitive situation progresses.
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