Sources say Merck to buy Cubist in $7 billion deal

8 December 2014

Sources close to the matter say US pharma giant Merck & Co (NYSE: MRK) has entered negotiations with Cubist Pharmaceuticals (Nasdaq: CBST) to buy the company in a deal potentially worth in excess of $7 billion.

The sources indicated that Merck will pay around $100 per share, a 34% premium on Cubist’s December 5 share price. Reacting to the speculation, Cubist’s share price rose as much as 26% to $93.50 in after-hours trading on Friday. The transaction could be announced early this week.

This deal would figure in Merck chief executive Kenneth Frazier’s strategy to pursue small- to mid-sized company acquisitions instead of tax inversion agreements. After selling its consumer healthcare business to Bayer (BAYN: DE) for $14.2 billion, Merck purchased Idenix Pharmaceuticals for $3.9 billion.

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