DEFA14A: Avadel Board Deems Lundbeck Offer Superior to Alkermes Deal

Avadel Pharmaceuticals' Board of Directors has determined that H. Lundbeck A/S's unsolicited acquisition proposal, valued at up to $23.00 per share, constitutes a Company Superior Proposal compared to its existing agreement with Alkermes.

Summary

• On November 17, 2025, Avadel Pharmaceuticals plc's Board of Directors determined that H. Lundbeck A/S's unsolicited proposal to acquire Avadel constitutes a Company Superior Proposal.
• Lundbeck's proposal is for up to $23.00 per ordinary share, comprising $21.00 per share in cash at closing.
• The proposal also includes a non-transferable contingent value right (CVR) for potential additional cash payments of $1.00 per share if LUMRYZ and valiloxybate collectively reach $450 million in annual U.S. net sales by December 31, 2027.
• A further $1.00 per share CVR is contingent upon LUMRYZ and valiloxybate collectively reaching $700 million in annual U.S. net sales by December 31, 2030.
• Avadel has notified Alkermes of this determination, triggering a five-business-day matching period during which Avadel will discuss or negotiate with Alkermes if requested.
• Avadel's Board has not yet changed its recommendation in support of the acquisition by Alkermes, and the Alkermes transaction agreement remains in full effect.
• Employees have been instructed to continue business as usual and direct all external inquiries to investor relations.

Sentiment

Score: 8

Explanation: The sentiment is positive due to a higher unsolicited acquisition offer, which is deemed 'superior' by the Board, indicating increased value for shareholders. The significant cash component and potential CVR upside contribute to this. However, the ongoing matching period and inherent M&A risks temper it from being a perfect 10.

Positives

• Lundbeck's proposal offers a higher potential value of up to $23.00 per ordinary share compared to the existing Alkermes agreement.
• The offer includes a significant cash component of $21.00 per share at closing, providing immediate value to shareholders.
• Contingent Value Rights (CVRs) offer shareholders potential upside tied to the future sales performance of LUMRYZ and valiloxybate, aligning interests with product success.

Negatives

• The CVRs are non-transferable, limiting liquidity for shareholders who might prefer immediate, certain value.
• The CVR payments are contingent on specific sales targets ($450M by 2027, $700M by 2030) for LUMRYZ and valiloxybate, introducing performance risk.
• The ongoing matching period with Alkermes creates uncertainty regarding the final outcome of the acquisition, potentially delaying a definitive resolution.

Risks

• The ability of the parties to consummate the acquisition in a timely manner or at all.
• The satisfaction (or waiver) of conditions to the consummation of the acquisition, including shareholder and regulatory approvals.
• The potential impact of the unsolicited proposal from Lundbeck or the possibility of more competing offers being made.
• Potential delays in consummating the acquisition.
• The ability of Avadel to timely and successfully achieve the anticipated benefits of the acquisition.
• The impact of health pandemics on the parties' respective businesses.
• The occurrence of any event, change, or other circumstance or condition that could give rise to the termination of the transaction agreement.
• The effect of the announcement or pendency of the acquisition on Avadel's business relationships, operating results, and business generally.
• Costs related to the acquisition.
• The outcome of any legal proceedings that may be instituted against the parties or any of their respective directors or officers related to the transaction agreement or the acquisition.

Future Outlook

Avadel expects the attention from external parties to continue and anticipates further updates as discussions and negotiations with Alkermes during the matching period conclude. The unsolicited proposal from Lundbeck may or may not result in a definitive agreement for an alternative business combination transaction. The company's current focus remains on executing its priorities.

Management Comments

• "As you know, on November 13, 2025, H. Lundbeck A/S (Lundbeck) made an unsolicited proposal to acquire Avadel Pharmaceuticals plc for up to $23.00 per ordinary share."
• "The Avadel Board has determined that the Lundbeck proposal constitutes a Company Superior Proposal."
• "At this time, Avadel's Board has not changed its recommendation in support of the acquisition by Alkermes and the Alkermes transaction agreement remains in full effect."
• "While these discussions are ongoing, it continues to be business as usual for all of us at Avadel."
• "The most important thing we can all do is execute our priorities as we always have and continue to demonstrate the strength of the Avadel team and our capabilities."
• "We expect the attention Avadel has been receiving from external parties will continue, and it is important for us to speak with one voice."
• "Consistent with company policy, please do not respond to any inquiries received from members of the media, investment community or other interested parties, and instead forward them to investors@avadel.com."

Industry Context

This announcement highlights the competitive landscape within the pharmaceutical industry, particularly for companies with promising drug assets like LUMRYZ and valiloxybate. Unsolicited acquisition proposals and subsequent bidding wars are common in biotech M&A, reflecting intense competition for growth opportunities and pipeline assets. The CVR structure is also a common mechanism in pharma deals to bridge valuation gaps and share future product success risks/rewards.

Corporate Governance

Stakeholder Impact

• Shareholders: Potential for a higher acquisition price and value realization through the Lundbeck offer, but also uncertainty during the matching period and reliance on CVR performance.
• Employees: Instructed to continue business as usual, indicating stability in day-to-day operations, but also a directive to funnel all external communications through investor relations, suggesting sensitivity around ongoing negotiations.
• Alkermes: Faces a challenge to its existing acquisition agreement, with a five-business-day period to potentially amend its offer to remain competitive.
• Lundbeck: Positioned as a potential acquirer with a superior offer, indicating strategic interest in Avadel's assets.

Next Steps

• Avadel will engage in discussions or negotiations with Alkermes during a five-business-day matching period, if requested by Alkermes.
• The Board will complete discussions and/or negotiations with Alkermes during the matching period.
• Avadel expects to keep employees updated as appropriate.
• Shareholders will need to read the definitive proxy statement (including the scheme document) and other relevant documents filed with the SEC in connection with the acquisition before making any voting decision.
• A shareholder meeting will be held to approve the acquisition, the scheme, or related matters.

Key Dates

Recommendation

The stock is likely to experience significant volatility due to the competing acquisition proposals. While the Lundbeck offer is deemed 'superior' and presents a higher potential value, the existing agreement with Alkermes remains in effect, and a five-business-day matching period has been triggered. This creates uncertainty regarding the final acquirer and terms. A 'hold' recommendation allows investors to retain their position to benefit from a potentially higher final offer, whether from Lundbeck or an improved Alkermes bid, while acknowledging the current lack of a definitive outcome and the associated risks of M&A negotiations.

Keywords

Avadel Pharmaceuticals, Lundbeck, Alkermes, Acquisition, Merger, Takeover, Superior Proposal, Contingent Value Right, CVR, LUMRYZ, valiloxybate, Pharmaceuticals, Biotech, M&A