A Couple Tidbits From the World of Business

Thanks to Matt Levine and Katie Greifeld and the latest episode of the Money Stuff Podcast, I have two really interesting stories to share about creative and highly sophisticated things one can do with contracts. The first involves hedge funds buying up the opportunity to capitalize on the seemingly likely finding that the administration’s tariffs are not authorized under the International Emergency Economic Powers Act (IEEPA). The second involves Novo Nordisk’s attempted acquisition of Metsera, which may just be an attempt to prevent Pfizer from acquiring Metsera.

The tariff deal is pretty simple. Companies were getting hit with tariffs. They didn’t want to pass the costs on to their customers right away, so they paid them, thinking maybe the tariffs were illegal, and so maybe they could get their money back. But the tariffs might not be illegal, and even if they are illegal, would the Supreme Court order the government to reimburse the companies that had paid the tariffs? In uncertain times, once might look for a way to hedge.

As Andrew Ross Sorkin, Bernhard Warner, Sarah Kessler, Michael J. de la Merced, Niko Gallogly, and Ian Mount report in The New York Times, financiers are approaching the companies that are both paying and challenging tariffs and offering to buy the right to refunds (should they arise) for pennies on the dollar. The administration being the administration, they are both bragging about how much tax revenue the new tariffs are bringing in and (before the Supreme Court) arguing that the tax revenue is just a secondary effect of tariffs triggered by an international economic emergency. The Court may pay attention to what the President says and ignore his lawyers attempts to characterize tariffs as something other than taxes.

According to Wired, Cantor Fitzgerald has at least one deal to pay $2-3 million to companies that have paid $10 million in tariffs. That’s awkward, as the firm is associated with Commerce Secretary Howard Lutnick and run by one of his sons. So the Commerce Secretary’s family is betting on a big loss for the administration. Interesting.

There are a lot of uncertainties. Even if the Supreme Court rules against the administration, as it seems likely to do, it is not clear that it will order refunds. If it does order such refunds, it is not clear, as a matter of public policy, whether the court will want public funds, at least part of which came out of the pockets of consumers, to go to Wall Street investors.

But there’s more. I was at a conference last weekend, and Loyola’s Sam Brunson gave a paper the tariff case. Sam pointed out that, even if the Supreme Court denies the administration the ability to impose tariffs under IEEPA, there may be statutory alternatives that the government could pursue. In the alternative, the supine Congress might impose the very tariffs that the administration is trying to impose without congressional input. This is less likely. Tariffs are a hard policy to sell to one’s constituents. Some Canadian guy, Ronald something or other, explained it very well.

In any case, would the Court order the government to reimburse payments made under unlawful tariffs if the government can then put very similar tariffs in place under other statutory authority? What if the alternative statutory scheme overlaps incompletely with IEEPA? What if the new tariffs fall on different sectors of industry than the current tariffs?

It’s a shame there is no mechanism — like a nationwide injunction — that would empower courts to stay the implementation of major legislative schemes that are authorized solely by executive orders. Then we could determine the legality of tariffs before they take effect.

In other news, as I learned from the Money Stuff podcast, a start-up called Metsera seems close to a new weight loss drug. This is concerning for Novo Nordisk, which dominates the market for such drugs globally with its products Ozempic and Wegovy. In the United States Eli Lilly competes with Mounjaro and Zepbound. Pfizer wants to get in on this market. There are billions of dollars to be made.

Originally, Pfizer’s bid for Metsera was valued around $8 billion. Novo Nordisk swooped in with a $10 billion offer. There’s just one problem. Antitrust regulators would almost certainly block Novo Nordisk’s attempt to acquire Metsera, so what’s the point? Novo Nordisk attempted to sweeten the deal, as detailed here, by offering to pay roughly three-quarters of the $10 billion upfront. If it succeeded in the acquisition, swell; if not, if would recover its investment from Metsera’s new acquirer.

Matt Levine reasons that Novo Nordisk might have known that its attempt to acquire Metsera was doomed, but its intervention in the bidding process likely would tangle up Metsera in regulatory delays. Even if its bid was successful, Novo Nordisk might have been willing to spend $10 billion just to smother this baby in its crib before it could become a rival. It would buy the company and then never release the new drug. In the alternative, the strategy might have been a sweet way to make a competitor pay Novo Nordisk in order to buy Metsera.

It seems we may never know what Novo Nordisk was up to. As Francesca Regalado reports in The New York Time, Pfizer upped its bid to meet Novo Nordisk’s, and the parties quickly signed a deal. The deal would be finalized after Metsera’s shareholder meeting set to take place today. In the meantime, Pfizer had filed one suit against Metsera and Novo Nordisk for breach of contract, breach of fiduciary duty and tortious interference and another suit for antitrust violations. I assume those cases will remain alive, in case Novo Nordisk continues its attempts to woo Metsera away from Pfizer.

Ann Lipton weighed in on the Business Law Prof Blog last week. Ann explores the additional angle that our administration might try to stick its beak into the deal and get its taste, as is its wont of late.