Reports: Merck in talks to buy Cubist
Shares of antibiotic maker Cubist Pharmaceuticals (CBST) were up sharply in after-hours trading amid reports the Lexington, Mass., company could be acquired as early as this week by health care giant Merck (MRK) in a deal worth more than $7 billion.
If finalized, the transaction would mark the latest in a series of multibillion dollar mergers and acquisitions in the pharmaceutical industry this year.
Whitehouse Station, N.J.-based Merck would pay roughly $100 per share for Cubist, The New York Times, The Wall Street Journal and other news organizations reported. That would represent nearly a 34.5% premium over the company's $74.36 per share closing price on Friday.
Shares of Cubist soared nearly 23%, to $91.25, when news of the potential transaction surfaced afterward.
Merck's reported offer would value Cubist at roughly $7.5 billion, based on the nearly 75.3 million shares outstanding at the time of the company filed its annual proxy report in April.
Merck spokeswoman Lainie Keller and Julie DiCarlo, a spokeswoman for Cubist, did not respond to messages seeking comment Sunday.
Cubist specializes in pharmaceuticals that treat drug-resistant bacteria and infectious diseases. The company has said it plans to increase worldwide revenues to $2 billion by 2017, more than double the company's 2012 income. That projection is driven by plans to introduce four new drugs that target bacterial infections.
The company has also projected more than $1 billion in U.S. sales by 2017 for its flagship product, Cubicin, which is an intravenous antibiotic used to treat bacterial infections.
Cubist CEO Mike Bonney, who oversaw the rollout of Cubicin in 2003, announced in October that he would step down from the top job as of Jan. 1 and become chairman of the company's board of directors. He will be succeeded by Robert Perez, currently Cubist's chief operating officer.
Merck is the second-largest U.S.-headquartered pharmaceutical firm, according to global sales rankings by IMS Health. The company's products include pharmaceuticals for heart and respiratory health, infectious diseases and women's health. Merck's research focuses in part on Alzheimer's disease, diabetes and cancer.
Merck CEO Ken Frazier told Bloomberg News in July the company was aiming at acquiring small or medium-sized drug firms whose products would complement the company's own offerings. Merck isn't interested in mega-deals, because they are "very time consuming and distracting to what we're here to do, which is invest in new medicines," Frazier said then.
Major pharmaceutical industry transactions this year include November's announcement by Dublin-based Actavis (ACT) that it plans to buy industry peer Allergan (AGN) in a $66 billion deal. The agreement disrupted a proposed hostile takeover of the California-headquartered Botox maker by Valeant Pharmaceuticals (VRX), based in Canada.