NOVARTIS AG accelerates "buy, buy, buy" strategy: invests another $12 billion to acquire Avidity Biosciences, becoming its largest deal in nearly a decade

According to the Zhitong Finance APP, Swiss pharmaceutical company Novartis AG (NVS.US) has agreed to acquire American biotechnology company Avidity Biosciences (RNA.US) in a deal valued at $12 billion. Novartis stated that it will purchase shares at a cash price of $72 each, representing a 46% premium over Avidity's closing price on Friday. Avidity closed at $49.15 on Friday, with a market capitalization of approximately $6.8 billion. Novartis indicated that the equity value of the transaction is $12 billion, but after the deal is completed, Avidity is expected to have about $1 billion in cash, bringing its enterprise value to approximately $11 billion. This makes it Novartis's largest acquisition in nearly a decade. Avidity is developing experimental drugs for rare diseases, including a neuromuscular disease known as type 1 dystonia. This transaction further fuels the merger and acquisition frenzy in the biotechnology sector, as large pharmaceutical companies are acquiring smaller firms with innovative technologies to boost revenue, given that older drugs have reached the end of their patent protection. Before the deal is finalized, Avidity plans to spin off its early-stage precision cardiology project into a new company called SpinCo. Novartis stated that Avidity may sell some or all of its assets to third parties. Avidity shareholders will receive 10 shares of SpinCo stock for each share of Avidity they hold, or if assets or SpinCo are sold before the Novartis transaction is completed, they will receive corresponding cash benefits. The entire transaction is expected to be completed in the first half of 2026, contingent upon the completion of the spin-off. Novartis focuses on cardiovascular, renal and metabolic drugs, immunology, neuroscience, and oncology. The company is seeking to expand its product portfolio. Later this year, the company will face competition from cheap generics that will impact three of its key drugs, including its best-selling heart drug Entresto. The pharmaceutical company agreed to acquire Tourmaline Bio in September, with a deal valued at approximately $1.4 billion. New York-based biotechnology company Tourmaline is developing a therapy that is expected to alleviate systemic inflammation, a major trigger for cardiovascular diseases. In April, Novartis agreed to acquire American biotechnology company Regulus Therapeutics, with a deal valuation potentially reaching $1.7 billion. Earlier this year, Novartis also expanded its heart disease treatment portfolio by acquiring American biotechnology company Anthos Therapeutics for up to $3.1 billion to obtain a stroke prevention drug. As the company's reform initiatives begin to take effect, Novartis raised its earnings expectations for the year in both April and July, driven by treatments for diseases such as breast cancer, multiple sclerosis, and psoriasis The company will release its earnings report on Tuesday. The U.S. Food and Drug Administration has granted Avidity's drug the designation of "breakthrough therapy" for the treatment of certain patients with Duchenne muscular dystrophy