Chinook Therapeutics, Inc. (NASDAQ: KDNY), a clinical-stage biotechnology company, has announced its agreement to merge with Novartis AG (NYSE: NVS). The merger will see Novartis acquire Chinook for $40 per share in cash, amounting to a total of $3.2 billion. This offer represents a significant premium of 83 percent to Chinook’s 60-day average stock price and 67 percent to its closing price on June 9, 2023.
In addition to the cash offer, Chinook shareholders will receive contingent value rights (CVRs). These CVRs allow for additional payments of up to $4 per share upon achieving certain regulatory milestones related to Chinook’s lead product candidate, atrasentan. If these milestones are met, the total consideration, including the CVRs, could reach approximately $3.5 billion. Importantly, this merger has received unanimous approval from the Boards of Directors of both companies.
The completion of the transaction is expected to take place in the second half of 2023. This is contingent upon approval by Chinook’s stockholders and the fulfillment of customary closing conditions. Until then, Chinook will continue to operate independently.
Chinook has engaged Centerview Partners LLC and MTS Health Partners, L.P. as financial advisors for the merger. In addition, Fenwick & West LLP has been appointed as legal counsel by Chinook.
Transaction Details
Under the terms of the merger agreement, Novartis will acquire all outstanding shares of Chinook through a subsidiary, paying $40 per share in cash at closing. In addition, Chinook shareholders will receive CVRs that could lead to payments of up to an extra $4 per share upon specific regulatory approvals for atrasentan. Of this amount, $2 is tied to IgA nephropathy and $2 to focal segmental glomerulosclerosis.
The closing of the transaction is subject to various conditions. These conditions include approval from Chinook’s stockholders, expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, and fulfillment of customary conditions.
On Friday, Shares of Chinook Therapeutics, Inc. (KDNY) showed an increase of 0.17% and closed at $23.99. Whereas, Novartis shares were up only 0.28% and closed at $100.93.
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