Avidity Biosciences' $12 Billion Novartis Acquisition: Corporate Governance Scrutiny and Shareholder Value Implications

The proposed $12 billion acquisition of Avidity Biosciences by Novartis AG has ignited a critical debate over corporate governance and shareholder value protection. While the all-cash deal offers Avidity shareholders $72 per share-a 46% premium over its closing price on October 24, 2025-the transaction has drawn scrutiny from Kahn Swick & Foti, LLC, a law firm led by former Louisiana Attorney General Charles C. Foti. The firm is investigating whether the process leading to the deal was transparent and whether the price adequately reflects Avidity's value, particularly given its groundbreaking RNA therapeutics platform, according to a Morningstar report.

Strategic Rationale and Market Reaction

Novartis's acquisition of Avidity is a strategic move to bolster its pipeline in rare neuromuscular diseases. Avidity's Antibody Oligonucleotide Conjugates (AOCs) technology enables targeted RNA delivery to muscle tissue, offering potential cures for conditions like Duchenne muscular dystrophy (DMD) and facioscapulohumeral muscular dystrophy (FSHD), as reported in a Novartis acquisition report. The deal, expected to close by mid-2026, also includes a spin-off of Avidity's early-stage cardiology programs into a new public entity, SpinCo, ensuring shareholders retain exposure to this pipeline, as covered by TS2 coverage.

The market has reacted positively, with Avidity's stock surging 42% following the announcement, according to The Motley Fool. Analysts attribute this optimism to Novartis's financial strength and the transformative potential of Avidity's therapies. However, the Kahn Swick & Foti investigation raises questions about whether this enthusiasm masks governance shortcomings.

Corporate Governance Concerns

The core of the investigation centers on two key issues: valuation fairness and board transparency. Kahn Swick & Foti is examining whether Avidity's board adequately negotiated the $72-per-share offer and whether the process allowed for alternative bids that might have yielded higher value for shareholders, according to a PR Newswire alert. The firm is also scrutinizing the spin-off of SpinCo, questioning whether this structure dilutes shareholder value or creates unnecessary complexity, as noted in a StockTitan notice.

Critics argue that the rapid approval of the deal-unanimously endorsed by both boards-lacks the rigorous due diligence typically expected in high-stakes mergers. For instance, Avidity granted equity awards to 37 new employees in 2022, signaling confidence in its growth trajectory, according to a GuruFocus report. Yet, the absence of a robust shareholder vote or independent appraisal process has fueled concerns about potential conflicts of interest, as observed in Blockonomi coverage.

Valuation Metrics and Comparative Analysis

To assess the deal's fairness, it's essential to compare Avidity's valuation with industry benchmarks. The $72-per-share price implies a price-to-revenue multiple of approximately 15x, based on Avidity's 2025 revenue projections, according to a Yahoo Finance report. While this is reasonable for a biotech firm with late-stage therapies, it pales in comparison to the 25x+ multiples seen in RNA therapeutics pioneers like Moderna (MRNA) and Ionis Pharmaceuticals (IONS).

Kahn Swick & Foti is also evaluating whether Novartis's strategic interest in Avidity's AOC platform justifies the premium. Novartis's own pipeline lacks robust RNA-based therapies, making Avidity's technology a critical acquisition, as discussed in PMLive coverage. However, the firm is questioning whether the $12 billion price tag fully accounts for the long-term value of Avidity's three late-stage programs, particularly given the high attrition rates in biotech R&D, a concern echoed in Turkiye Today coverage.

Strategic Steps for Shareholders

Given the ongoing investigation, shareholders should take proactive steps to protect their interests:
1. Monitor Regulatory and Legal Developments: The closure of the deal hinges on regulatory approvals and the completion of the SpinCo spin-off. Shareholders should track updates from the U.S. Department of Justice and the European Commission, as reported by Bitget.
2. Engage with Legal Counsel: Investors with concerns about the deal's fairness should contact Kahn Swick & Foti or Monteverde & Associates PC to explore potential class-action claims, as noted in PR Newswire.
3. Evaluate SpinCo's Prospects: The success of the SpinCo entity will depend on its ability to attract investment and advance its cardiology pipeline. Shareholders should assess SpinCo's management team and capital structure before the acquisition closes, as The Motley Fool notes.

Conclusion

The Avidity-Novartis deal represents a significant milestone for RNA therapeutics but also underscores the need for rigorous corporate governance in high-profile mergers. While the $72-per-share offer appears generous on the surface, the Kahn Swick & Foti investigation highlights the importance of transparency and due diligence in ensuring fair value for shareholders. As the biotech sector continues to evolve, investors must remain vigilant in holding boards accountable for decisions that shape long-term value.