Cubist Pharmaceuticals (CBST) to be Acquired by Merck in $9.5B Deal

Shares of Cubist Pharmaceuticals Inc. (CBST) were up +26.66 or +35.85 percent to $101.02 per share in this morning's premarket, after news broke late Friday that the company was in acquisition talks with Merck & Co. (MRK). The deal, which was just announced this morning, could be worth as much as $9.5 billion. Cubist stock closed at $74.36 per share, down -0.16 or -0.21 percent in Friday's regular trading session.

Lexington, Massachusetts based Cubist Pharmaceuticals Inc. was founded in 1992.
The company is known for researching and developing antibiotics, and other pathogens. The company's main products include CUBICIN Daptomycin, a drug from a group of anti-infectives known as lipopeptides. The company was recently approved by the FDA for Tedizolid (Sivextro), a treatment for skin infections and is expected to be approved for Ceftolozane/Tazobactimis later this month. Cubist acquired Optimer Pharmaceuticals and Trius Therapeutics in 2013 for $1.6 billion. In October, Cubist announced it would replace Chief Executive Michael Bonney with Robert J. Perez, effective January 1st, 2015.

The deal, which was just made public, will have Merck & Co. pay $102 per Cubist share, a premium of +37 percent over Cubist stock's Friday closing price of $74.36. The transaction has been unanimously approved by the boards of both companies and will have Merck assume $1.1 billion in debt.

Michael Bonney, Cubist CEO stated in a press release that, "Combining with Merck is an exciting opportunity to accelerate Cubist's established leadership in antibiotics and deliver significant, certain and immediate value to shareholders, he continued saying, "We have a deep respect for Merck, and it is clear that they share our commitment to addressing the growing, global problem we are facing in combating antibiotic-resistant bacteria. Under Merck's robust commercial platform, global reach and scientific expertise, we believe Cubist's programs can thrive. We're proud of the company that our team has built and are confident that Cubist's important mission and focus on significant unmet medical needs will continue.

Kenneth C. Frazier, chairman CEO of Merck said, "Cubist is a global leader in antibiotics and has built a strong portfolio of both marketed and late-stage pipeline medicines. Combining this expertise with Merck's strong capabilities and global reach will enable us to create a stronger position in hospital acute care while addressing critical areas of unmet medical need, such as antibiotic resistance.

The tender offer, which has not yet begun, will be done through a Merck subsidiary that will acquire all of Cubist Pharmaceutical's outstanding shares, with the closing of the transaction subject to certain conditions. After the tender offer is completed, remaining shares will be acquired by Merck through a second step merger. The deal is expected to close in the first quarter of 2015.

Cubist Pharmaceutical stock is already trading just one point below the offer in todays premarket, while Merck stock is up just a fraction, signaling the deal will be completed as planned. The acquisition will give Merck a strong position in the new antibiotics that fight infections resistant to traditional antibiotics named "superbugs .

Other News About Cubist Pharmaceuticals
Cubist Names Dr. Patrick Vink Chief Operating Officer
Senior vice president will begin as the company's CFO on January 1st, 2015.
Cubist stock was upgraded by TheStreet Ratings last month.

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Published on Dec 8, 2014
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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