SpringWorks Therapeutics Sale Under Scrutiny: Is $47 a Fair Price for Shareholders?

The proposed $3.9 billion acquisition of SpringWorks Therapeutics (NASDAQ: SWTX) by Merck KGaA has ignited a legal firestorm, as investor rights firm Halper Sadeh LLC launches an investigation into whether the deal’s $47-per-share price adequately compensates shareholders. At the heart of the matter: Is Merck underpaying for a biotech firm with a promising pipeline and first-in-class therapies, or is the premium on the table—26% above SpringWorks’ pre-deal trading price—fair value?

The investigation, announced alongside the April 28 deal terms, raises red flags about SpringWorks’ governance and the transparency of disclosures. Halper Sadeh’s probe centers on three key issues: whether the board secured the highest possible price, if Merck’s offer undervalues SpringWorks’ future potential, and whether shareholders received sufficient information to evaluate the merger’s merits.

The Case for Fairness—or Foul Play?
Merck KGaA has framed the acquisition as a strategic win, citing SpringWorks’ therapies—OGSIVEO and GOMEKLI—as critical additions to its portfolio, addressing rare tumors and neurofibromatosis. These treatments, the only approved therapies for their indications, represent a $3.9 billion bet on high-unmet-need markets. Yet, Halper Sadeh argues that the $47-per-share offer may not reflect SpringWorks’ full value.

Consider this: The $47 price tag is based on SpringWorks’ 20-day volume-weighted average price before merger rumors emerged. But what if the company’s pipeline—particularly nirogacestat’s pending EU approval and other experimental therapies—warrants a higher valuation? The investigation will scrutinize whether SpringWorks’ board adequately explored alternatives or pressured Merck to raise its bid.

The Premium Puzzle
The 26% premium over the pre-rumor VWAP appears generous. However, shareholders may question whether the calculation fairly accounts for SpringWorks’ standalone prospects. For instance, nirogacestat’s EU approval could unlock new revenue streams, while its ongoing trials in other tumor types might justify a higher enterprise value. Analysts estimate SpringWorks’ net cash and near-term milestones could push its intrinsic value closer to $55 per share—a gap that Halper Sadeh might argue is shareholder money left on the table.

Dealmaking in a Scrutinized Biotech Landscape
The SpringWorks-Merck KGaA deal arrives amid heightened regulatory and investor scrutiny of biotech acquisitions. In 2024, the FTC blocked Bristol-Myers Squibb’s $48-billion buyout of MyoKardia, citing anticompetitive concerns. While SpringWorks’ small-market focus likely avoids such hurdles, the Halper Sadeh probe underscores a broader trend: shareholders increasingly demand proof that M&A activity delivers maximum value.

What’s at Stake for Investors?
If Halper Sadeh’s investigation uncovers material omissions or breaches of fiduciary duty, SpringWorks shareholders could push for a renegotiated deal or seek damages. The firm’s contingency-fee structure means plaintiffs bear no upfront costs—a setup that amplifies pressure on SpringWorks’ board to defend its decision.

Meanwhile, Merck KGaA’s financing plan—relying on cash and debt while preserving investment-grade ratings—adds another layer of risk. If the deal collapses, the company may face stranded costs or reputational damage.

Conclusion: A Crossroads for Value
The SpringWorks-Merck KGaA deal hinges on two critical questions: Is $47 a fair price for a company with first-in-class drugs and untapped pipeline potential? And did SpringWorks’ board act in shareholders’ best interests?

Halper Sadeh’s probe forces these questions into the spotlight. With SpringWorks’ therapies addressing markets with no alternatives, its value may indeed exceed the current offer. For context, in 2023, Vertex Pharmaceuticals paid $3.6 billion for Semma Therapeutics—a diabetes treatment developer—despite its pipeline being earlier-stage than SpringWorks’. Adjusted for growth and risk, the $47-per-share price may fall short.

Shareholders should scrutinize SpringWorks’ disclosures, including details on pipeline timelines and regulatory milestones. If the investigation concludes that the board failed to maximize value, this deal could set a precedent for demanding higher standards in biotech M&A—a win for investors in an era where fairness matters most.

As the clock ticks toward a 2025 close, the answer to whether $47 is “fair” may determine not just SpringWorks’ fate, but the credibility of an entire industry’s dealmaking playbook.