Merck/Cubist

Merck/Cubist
Deal value: $9.5 billion
Deal status: Open

Massachusetts-based Cubist had long been rumored as a buyout target, with deal shoppers Shire ($SHPG) and Pfizer ($PFE) tagged as potential buyers. But it was Merck ($MRK)--which was looking to zero in on key areas of focus--that ultimately sealed the deal, agreeing to fork over $102 per share plus $1.1 billion in net debt.

The way the New Jersey pharma giant saw it, antibiotics specialist Cubist--with its top performer Cubicin and newly green-lighted Sivextro--could bolster Merck's hospital-oriented business, one of the areas it had pegged for growth. Merck also figured it could get more out of those marketed drugs by throwing its Big Pharma marketing heft behind them.

But the very day the companies announced the deal, they got some bad news. A U.S. court nixed all but one of the patents covering Cubicin--and the remaining IP shield only lasts until 2016. That decision put a whole lot of Cubist revenues in jeopardy, with Cubicin raking in more than $700 million in sales for the first 9 months of last year--significantly more than the $47.7 million second-place seller Dificid churned out.

Later in the month, though, the FDA gave Merck a boost with the approval of new Cubist antibiotic Zerbaxa. Analysts expect the drug to bring in about $560 million in 2018 sales, and while that won't fill Cubicin's shoes, it certainly helps the pharma giant justify the price it's paying for the deal.

For more:
Cubist has its Zerbaxa OK. Can Merck make the launch justify its $9.5B buyout?
Did Merck pay $3B too much for Cubist? Weighing the impact of Cubicin patent loss
Merck adds heft to hospital biz with $9.5B Cubist buyout
Talk gets fevered over whether Pfizer, J&J or Lilly might make a run at Cubist

--Carly Helfand (email | Twitter)

Merck/Cubist
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