Pfizer to raise $31 billion for Seagen deal in debt offering

Pfizer to raise $31 billion for Seagen deal in debt offering

A Pfizer logo is displayed on a monitor on the floor of the New York Stock Exchange on July 29, 2019.

Brendan McDermid | Reuters

Pfizer plans to raise $31 billion through a debt offer to fund its proposed acquisition of the cancer drug maker SeenIt would be the largest acquisition since 2009, according to a new filing with the Securities and Exchange Commission.

Pfizer expects to close its $43 billion acquisition of Seagen later this year or early 2024.

The bond offering is expected to close on Friday, according to a prospectus supplement that New York-based Pfizer filed with the SEC late Tuesday.

The pharma giant’s debt offering would be its biggest since CVS health sold $40 billion in bonds in 2018 to fund its acquisition of health insurer Aetna.

Pfizer’s move comes as other companies, including Apple, T Mobile And Merck They rush to tap the US bond market ahead of a possible rise in borrowing costs triggered by the debt ceiling standoff.

Pfizer’s share price fell slightly on Wednesday.

The company said it will secure funding for the Bothell, Wash.-based Seagen purchase through eight tranches of notes maturing between 2025 and 2063.

Each tranche is valued at $3 billion to $6 billion.

The yield to maturity of the 10-year Pfizer bond would be 4.75%, which would be around 125 basis points higher than that 10-year US government bonds Note.

Signage outside Seagen’s headquarters in Bothell, Wash. on Tuesday, March 14, 2023.

David Ryder | Bloomberg | Getty Images

Bank of America, Citigroup, Goldman Sachs And JPMorgan Chase manage the debt sale.

Pfizer agreed in March to buy Seagen for $229 per share in cash.

On Monday, the two companies filed documentation for their proposed merger with the Federal Trade Commission and the Department of Justice, beginning a review phase of the deal.

Investors are likely to be watching this high-risk scrutiny closely, especially in light of Tuesday’s lawsuit seeking a lockdown from the FTC amgen‘s proposed $27.8 billion acquisition Horizon Therapeutics.

The Seagen deal is expected to strengthen Pfizer’s cancer drug portfolio by introducing a class of antibody-drug conjugates, drugs designed to kill cancer cells directly and spare healthy cells.

Seagen has four approved cancer therapies that generated combined sales of nearly $2 billion in 2022.

Pfizer has said it expects “risk-adjusted” sales from Seagen to exceed $10 billion in 2030.

Those sales could help offset a continued decline in sales of Pfizer’s Covid vaccine and antiviral pill Paxlovid as the world emerges from the pandemic and becomes less reliant on those products.