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Merck buys Cubist for $8.4 billion

Monday, December 08, 2014 - 01:20

The purchase fits Merck's plans to partly focus on acute care in hospitals. Cubist's lead drugs treats infections caused by drug-resistant bacteria. Fred Katayama reports.

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Merck's going after the so-called superbugs. It's buying antibiotics maker Cubist Pharmaceuticals for $8.4 billion and debt, paying a 37 percent premium. Cubist makes Cubicin, an antibiotic that treats potentially life-threatening infections caused by drug-resistant bacteria. That fits with Merck's plans to partly focus on acute care within big hospitals. It's also in line with its strategy of buying mid-sized pharmaceutical firms like the hepatitis C drug maker, Idenix, which it purchased in June to expand its aging pipeline of drugs hit hard by generic competition. It has the money to do so, having sold its consumer health brands like Coppertone and Dr. Scholl's to Bayer for $14 billion earlier this year. Merck says Cubist will add to its earnings in 2016. Just ahead of the announcement, J.P. Morgan analyst Chris Schott said, "The combination of Cubist's and Merck's anti-infective portfolios would create a clear leader in the category and we believe such a transaction could generate mid-single-digit accretion assuming operating synergies." Cubist's shares rocketed higher in early trading. Merck's shares are up 23 percent this year, far outstripping rival Pfizer's 4 percent gain.

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Merck buys Cubist for $8.4 billion

Monday, December 08, 2014 - 01:20