Eli Lilly and Company (NYSE:LLY) entered into a definitive agreement to acquire Akouos, Inc. (NasdaqGS:AKUS) from a group of shareholders for approximately $460 million on October 17, 2022. Under the terms of agreement, Eli Lilly will commence a tender offer (the “Offer”) to purchase all of the issued and outstanding Shares in exchange for (a) $12.50 per Share, net to the stockholder in cash, without interest (the “Cash Consideration”) and less any applicable tax withholding, plus (b) one non-tradable contingent value right (“CVR”) per Share, which represents the contractual right to receive contingent payments of up to $3.00 per CVR, net to the stockholder in cash, without interest and less any applicable tax withholding, upon the achievement of certain specified milestones in accordance with the terms and subject to the conditions of a contingent value rights agreement (the “CVR Agreement”) to be entered into with a rights agent selected by Lilly and reasonably acceptable to the Issuer (the Cash Consideration plus one CVR, collectively, the “Offer Price”). After the consummation of the Offer and the satisfaction or waiver of certain conditions, Purchaser will merge with and into the Issuer pursuant to Section 251(h) of the General Corporation Law of the State of Delaware, as amended (the “DGCL”), upon the terms and subject to the conditions set forth in the Merger Agreement, with the Issuer continuing as the surviving corporation and becoming a wholly-owned subsidiary of Lilly (the “Merger”). As a part of acquisition, each outstanding stock option to purchase Shares granted by the Issuer having an exercise price less than the Cash Consideration (each such option, a “Cash-Out Stock Option”), will automatically be cancelled, by virtue of the Merger and without any action on the part of any holder of any Cash-Out Stock Option, and each holder of such Cash-Out Stock Option will be entitled to receive and each Share of Restricted Stock that is outstanding immediately prior to the Effective Time will vest in full as of immediately prior to the Effective Time and will be treated in the same manner as all other Shares in the Merger, subject to applicable tax withholding. The Reporting Persons expect to fund these payments out of cash on hand and borrowings at prevailing market interest rates under Lilly's commercial paper program. Following the Merger, the Issuer will become a wholly-owned subsidiary of Lilly. In addition, Lilly will cause the Shares to be delisted from the Nasdaq and deregistered under the Act. In case of termination of the transaction under certain circumstances Akouos will be required to pay a termination fee of $17.5 million.

The deal is subject to (i) that there shall have been validly tendered in the Offer and not validly withdrawn prior to the expiration of the Offer that number of Shares that, together with the number of Shares, if any, then owned beneficially by Lilly and Purchaser (together with their wholly-owned subsidiaries), would represent a majority of the Shares outstanding as of the consummation of the Offer, (ii) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and any agreement with any governmental body not to consummate or to delay consummation of the transactions and the tender of a majority of the outstanding shares of Akouos's common stock. Following the successful closing of the tender offer, Lilly will acquire any shares of Akouos that are not tendered in the tender offer through a second-step merger at the same consideration as paid in the tender offer. The transaction is not subject to any financing condition. The deal has been approved by the board of directors of Eli Lilly and Company. The board of directors of Akouos unanimously approved the transaction. The transaction is expected to close in the fourth quarter of 2022. At the expiry of offer on November 29, 2022, 29,992,668 Shares were validly tendered and not validly withdrawn in the Offer, representing 81.1% of the issued and outstanding Shares of Akouos. Accordingly, the Minimum Tender Condition has been satisfied. The parties expect to consummate the acquisition on December 1, 2022, in accordance with, and subject to the terms of, the definitive agreement for the proposed acquisition.

Keri Schick Norton, Sarkis Jebejian, Sophia Hudson, Sharon Freiman, Shellie Weisfield Freedman, and Amber Harezlak of Kirkland & Ellis LLP are acting as legal advisor for . For Akouos, Rosemary G. Reilly, Joseph B. Conahan and Andrew Bonnes of Wilmer Cutler Pickering Hale & Dorr LLP are acting as legal counsel and Centerview Partners LLC as financial advisor and fairness opinion provider. Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as legal advisor to Centerview Partners LLC in the transaction. Computershare Trust Company, National Association acted as depositary and transfer agent to Akouos. Georgeson LLC acted as information agent to Akouos.

Eli Lilly and Company (NYSE:LLY) completed the acquisition of Akouos, Inc. (NasdaqGS:AKUS) from a group of shareholders on December 1, 2022. Akouos is now a wholly owned subsidiary of Eli Lilly.