Pfizer to raise $31 billion in debt offering to fund Seagen acquisition, SEC filing shows

Pfizer plans to raise $31 billion through a debt offering to fund its proposed acquisition of cancer drugmaker Seagen, for what would be its largest takeover since 2009, according to a new filing with the Securities and Exchange Commission.

Pfizer expects to complete the $43 billion Seagen buyout later this year or in early 2024. 

The debt offering is expected to close on May 19, according to a prospectus supplement New York-based Pfizer filed with the SEC late Tuesday. 

The pharma giant’s debt offering would be the biggest since CVS Health sold $40 billion of bonds in 2018 to finance its acquisition of health insurer Aetna. 

Pfizer’s move comes as other corporations including Apple, T-Mobile and Merck rush to tap the U.S. bond market ahead of a potential spike in borrowing costs sparked by the debt ceiling standoff. 

Pfizer’s stock price dropped slightly on Wednesday.

The company said it will secure funding for the deal to buy Bothell, Washington-based Seagen through eight tranches of notes that will mature between 2025 and 2063.

Each tranche is worth $3 billion to $6 billion.

The yield to maturity on Pfizer’s 10-year bonds would be 4.75%, which is around 125 basis points higher than the U.S. 10-year Treasury note.

Bank of America, Citigroup, Goldman Sachs and JPMorgan Chase are managing the debt sale. 

Pfizer in March agreed to buy Seagen for $229 per share in cash. 

On Monday, the two companies submitted paperwork for their proposed merger to the Federal Trade Commission and the Department of Justice, kicking off a review period for the deal.

Investors are likely to monitor that high-stakes review closely, particularly in light of the lawsuit filed Tuesday by the FTC seeking to block Amgen‘s proposed $27.8 billion acquisition of Horizon Therapeutics.

The Seagen deal is expected to strengthen Pfizer’s portfolio of cancer drugs by bringing a class of antibody-drug conjugates, medicines that are designed to directly kill cancer cells and spare healthy ones.

Seagen has four approved cancer therapies, which raked in combined sales of nearly $2 billion in 2022. 

Pfizer has said it expects more than $10 billion in “risk-adjusted” sales from Seagen in 2030.

That revenue could help offset an ongoing decline in sales of Pfizer’s Covid vaccine and antiviral pill Paxlovid as the world emerges from the pandemic, and relies less on those products.