Small Molecule

Merck to Buy Cubist Pharma for $8.4B

Dec 08, 2014

Merck and Cubist Pharmaceuticals have entered into a definitive agreement under which Merck will acquire Cubist for $8.4 billion and will also include $1.1 billion in net debt and other considerations for a total transaction value of approximately $9.5 billion.

“Cubist is a global leader in antibiotics and has built a strong portfolio of both marketed and late-stage pipeline medicines,” said Kenneth C. Frazier, chairman and chief executive officer, Merck. “Combining this 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.”

“Combining with Merck is an exciting opportunity to accelerate Cubist’s established leadership in antibiotics and deliver significant, certain and immediate value to shareholders,” said Michael Bonney, chief executive officer, Cubist.

 Cubist’s antibiotic CUBICIN®, the only approved once-a-day therapy for both S. aureus bacteremia and complicated skin and skin structure infections, has been used to treat more than two million patients and continues to be an important therapy in the acute care environment. Cubist’s in-line and late-stage pipeline of anti-infective medicines, including ZERBAXA™ which is pending approval from the U.S. FDA, will enhance Merck’s hospital acute care business in a variety of therapeutic areas, including Gram-positive and Gram-negative multi-drug resistant infections.

The acquisition of Cubist creates strong fundamental value with return on capital in excess of Merck's hurdle rate within a few years of closing. Merck expects the acquisition to add more than $1 billion of revenue to its 2015 base. Read the full release

UPDATED:
According to Reuters, Merck remains committed to its $8.4 billion acquisition of Cubist Pharmaceuticals even though a federal court invalidated most of the patents protecting the company's top-selling antibiotic just hours after that deal was announced Monday. Read more.