According to people with knowledge of the matter, Merck & Co. has entered into negotiations to purchase Cubist Pharmaceuticals in a transaction potentially valued at more than $7 billion. In the deal, which could be announced as early as Monday, the sources indicated that Merck will pay about $100 per share, representing a 34-percent premium over Cubist's share price on December 5.
Shares in Cubist rose as much as 26 percent on the news. Sources however cautioned that the deal has not been finalised and that talks could collapse.
The potential transaction would follow Merck CEO Kenneth Frazier's previously announced strategy to eschew mega-deals or tax inversion agreements while pursing small to mid-sized acquisitions that would bolster its portfolio of prescription therapies. In June, Merck reached an agreement to purchase Idenix Pharmaceuticals for about $3.9 billion. The drugmaker also agreed in May to sell its consumer healthcare business to Bayer in a deal valued at $14.2 billion.
Should the acquisition go through, Merck would obtain Cubist's top-selling drug Cubicin (daptomycin), which has been cleared by the FDA for the treatment of serious skin infections and bloodstream infections. The therapy, which generates more than 80 percent of Cubist's revenue, is projected to amass $2 billion in annual sales by 2017.
Cubist's portfolio is expected to compliment Merck's existing infectious disease programme. In September, Merck's beta-lactamase inhibitor relebactam was granted fast-track status by the FDA. The antibiotic has also been designated as a Qualified Infectious Disease Product.
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