Cubist bid initiated by Merck (MergerMarket)
Talks for Merck’s (NYSE:MRK) USD 8.4bn bid to acquire Cubist Pharmaceuticals (NASDAQ:CBST) were initiated after the pharma major approached Cubist about a possible acquisition, said a person familiar with the situation.
The Lexington, Massachusetts based antibiotics maker subsequently sounded interest from other possible buyers before agreeing to the deal, the person added.
Earlier today, Merck announced that it has agreed to acquire Cubist for USD 102 per share in cash, or USD 9.5bn in enterprise value, a 35% premium to Cubist’s average stock price over the last five trading sessions.
Two industry bankers said Merck paid a significant premium to acquire Cubist as the White House Station, New Jersey-based pharma major has been discussing ramping up its antibiotics side of the business. Cubist was already trading at a steep valuation given it was rumored to be a takeover target, they said.
Cubist probably caught Merck’s attention by being the only large, pure-play independent antibiotics company that the buyer could acquire, the first banker added.
Cubist’s “solid portfolio of brands and late stage pipeline made Cubist an ideal acquisition for Merck. Cubist's experience and commercial portfolio will enable us to enhance our growing hospital acute care business. Notably, the acute care market is growing two times faster than the overall market and hospitals have become a central hub for healthcare delivery around the world, currently representing 25% of overall healthcare spend,” said Merck CEO Ken Frazier on a conference call following the merger announcement.
Merck is expected to file a Hart-Scott Rodino application shortly, the person said. The tender offer will also be launched soon, he added. The deal is expected to close in the first quarter of next year.
In this transaction, JPMorgan and Deutsche Bank served as financial advisors to Merck, and Hughes Hubbard & Reed LLP and Baker & McKenzie served as its legal advisors. Morgan Stanley and Goldman Sachs served as financial advisors to Cubist, and Ropes & Gray served as its legal advisor.