Farallon Capital Opposes Terms of Merck’s Acceleron Takeover

(Bloomberg) -- Another top-10 holder in Acceleron Pharma Inc. has come out against its proposed $11.5 billion takeover by Merck & Co. Inc., arguing the sale price undervalues the company.

Farallon Capital Management, which owns a more than 4% stake in Acceleron, said in an emailed statement that it appreciated the value the management team has created and the strategic position it has achieved. But it said it doesn’t support the terms of the sale.

“While we hold Merck in high regard, its offer of $180 per share does not recognize the value of the company’s uniquely strategic position,” the firm said. “We believe Acceleron has a clear path to substantial value creation as a standalone company, and less strategic assets have recently been sold for far higher valuations.”

Acceleron fell 0.5% to $173.04 at 10:30 a.m. in New York trading Tuesday, giving the company a market value of about $10.6 billion.

Representatives for Acceleron and Merck weren’t immediately available for comment.

Farallon’s opposition is another blow to Acceleron’s plans to sell itself.

Merck agreed to buy Acceleron in September and said it expects the deal to close by year end. But Merck needs a majority of a Acceleron’s shareholders to tender their shares in order for the deal to proceed. The price values Acceleron at a 34% premium to where it traded at the end of August. 

That’s not good enough for several large investors that have expressed reservations about the deal. Darwin Global Management, which owns a 3.8% stake in the company, and Holocene Advisors, have said they won’t tender their shares. 

Another top holder, Avoro Capital Advisors, which owns about 7% of Acceleron, has been vocal in its opposition to the deal. It argued in a letter to shareholders last week that a sale at $180 a share is not needed at the time, especially at that price. 

Avoro has argued that there are other avenues the company could pursue to raise capital, including remaining independent and monetizing royalties. 

Behzad Aghazadeh, Avoro Capital managing partner, said if the current board is unwilling to forgo the Merck deal and pursue a standalone strategy, he would be willing to revamp the board and add directors with relevant experience. 

Bristol-Myers Squibb Co., Acceleron’s largest shareholder, plans to tender its shares in the deal, people familiar with the matter told Bloomberg News last month. Bristol-Myers owns a 11.5% stake in the company, according to data compiled by Bloomberg.

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