Merck & Co., Inc. (NYSE:MRK) is looking forward to expanding its portfolio of drugs mostly administered in the hospital settings for bacterial infections after tabling a $9.5 billion takeover bid for Cubist Pharmaceuticals Inc. (NASDAQ:CBST). CNBC’s Meg Tirrell reports that the giant pharmaceutical will also absorb a $1.1 billion in net debt as part of the deal.
“Merck & Co., Inc. (NYSE:MRK) is buying Cubist for $102 a share for a total deal value of $9.5 billion. That’s an equity value of $8.4 billion plus net debt of $1.1 billion. That represents a premium of 35% over Cubist average trading prices in the last 5 days,” said Mrs. Tirrell.
Buying Cubist will be a major milestone for Merck, which has been looking for opportunities to bolster its antibiotics portfolio. Merck is also looking forward to gaining a great deal from the upcoming Cubist Pharmaceuticals Inc. (NASDAQ:CBST)’s Cubicin antibiotic that has been developed to counter bacterial infections and help patients recover from bowel surgery.
Merck CEO, Ken Frazier, affirms that by combining the expertise across the board they will be able to create a stronger position in hospital acute care.
“Off course with this Deal Merck & Co., Inc. (NYSE:MRK) brings in a lot of antibiotics including the billion dollar antibiotics cubicin and another drug that is expected to be approved by the FDA this month. Which could bring in $1.5 billion in annual revenue,” said Mrs. Tirrell.
The deal comes on the heels of Merck & Co., Inc. (NYSE:MRK) affirming its willingness to focus on acute care in hospital settings as well as diabetes treatments, oncology, and vaccine. Merck remains confident that the deal will allow it to add up to $1 billion in annual revenue starting 2015. The deal is also expected to be neutral to adjusted earnings-per-share, starting 2015.
Cubist Pharmaceuticals Inc. (NASDAQ:CBST) and Merck & Co., Inc. (NYSE:MRK) remain confident on the deal closing in the first quarter of 2015. Cubist is also looking forward to attaining an FDA approval for Ceftolozane/Tazobactamis, a drug developed for addressing issues related to urinary tract infections.
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