Healthcare giant Merck & Co., Inc. is to acquire antibiotics specialist Cubist Pharmaceuticals, Inc. for $8.4 billion, the company announced on Monday.
Merck has agreed to pay $102 per share in cash, representing a 35 percent premium to Cubist's average stock price for the last five trading days. The agreement also includes $1.1 billion in net debt and other considerations, taking the total transaction value to approximately $9.5 billion.
Cubist develops advanced antibiotics to treat serious and potentially life-threatening infections caused by a broad range of increasingly drug-resistant bacteria.
Combining its expertise with Merck's strong capabilities and global reach "will enable us to create a stronger position in hospital acute care while addressing critical areas of unmet medical need, such as antibiotic resistance," commented Kenneth C. Frazier, chairman and CEO of Merck.
The acquisition includes the antibiotic Cubicin, the only approved once-a-day therapy for both S. aureus bacteremia and complicated skin and skin structure infections (cSSSI).
Cubist also has an in-line and late-stage pipeline of anti-infective medicines. Among them is Zerbaxa, which is awaiting approval from the U.S. Food and Drug Administration.
Merck said last year that it would be focusing on the hospital acute care segment as one of its key priorities. The company expects this acquisition to enhance its hospital acute care business in a range of therapeutic areas, including Gram-positive and Gram-negative multi-drug resistant infections.
The addition of Cubist will add more than $1 billion of revenue in 2015. The transaction will be neutral to non-GAAP EPS in 2015 but is anticipated to be significantly accretive to non-GAAP EPS in 2016 and beyond.
The deal is expected to be completed in the first quarter of 2015.
