BioNTech takes over CureVac in $1.25 billion all-stock deal among COVID rivals

German biotech firm BioNTech (22UAy.DE), has agreed to acquire domestic peer CureVac, for about $1.25 billion worth of BioNTech shares, it said on Thursday, to boost its work on new mRNA-based cancer treatments.

Under the deal, which pairs two former rivals in the race to develop COVID-19 vaccines, CureVac shareholders stand to receive a premium of 55% over the three-month average share price, and leave them with a stake of about 4%-6% in BioNTech, the suitor said.

CureVac's Frankfurt-listed shares surged 27% to a five-month high, valuing the company at €1.04 billion ($1.2 billion), while BioNTech shares were down 2%.

The deal further underscores BioNTech's long-term pursuit of new cancer treatments as it aims to show that its success as Pfizer's COVID-19 vaccine partner, which left its balance sheet flush with billions of euros in cash, was not a fluke.

"With the acquisition, BioNTech aims to strengthen the research, development, manufacturing, and commercialization of investigational mRNA-based cancer immunotherapy," the company said.

CureVac opted to focus on oncology about a year ago when it agreed to sell its remaining influenza and COVID-19 vaccine development to alliance partner GSK.

It had previously cut jobs as it sought to move beyond its failure to develop an mRNA-based COVID vaccine during the pandemic.

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The agreement is also set to end CureVac's years-long legal fight over alleged mRNA patent infringement by BioNTech and for a share of vaccine revenues, where CureVac has made little progress.

CureVac shares were worth as much as €120 in December 2020 on hopes it would develop a COVID vaccine, more than double their initial public offer value in August of that year. They are now trading at €4.65.

BioNTech won a major shot in the arm for its cancer drug activities last week when Bristol Myers Squibb agreed to pay up to $11.1 billion to jointly develop a next-generation cancer immunotherapy that could take on rival Merck & Co's best-selling drug Keytruda.

Each CureVac share will be exchanged for about $5.46 in BioNTech American depositary shares, or ADS, but subject to a so-called collar mechanism, BioNTech said.

If the 10-day volume-weighted average price of BioNTech ADS shortly before the closing of the offer exceeds $126.55, the exchange ratio would be 0.04318, and if the price is lower than $84.37, the exchange ratio would be 0.06476.

BioNTech said the deal was supported by SAP SE co-founder and football investor Dietmar Hopp, who holds a stake of about 37% in CureVac.

The German government, owner of about 13% in CureVac for its financial backing during the pandemic, said it welcomed in principle the creation of a "new German biotech champion", and that it would review the offer.
 

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