One day after saying it would spend $9.5 billion to acquire Cubist Pharmaceuticals, Merck & Co., announced that an adverse court decision about key patents for Cubist would not deter it from acquiring the smaller antibiotic drugmaker.
Cubist gets about 80 percent of its revenue from Cubicin. The U.S. district court in Delaware ruled in favor of Hospira in a patent dispute, saying that four of five patents related to Cubicin were invalid. The court said the patent that expires on June 15, 2016 is valid. The decision is subject to appeal. If it stands, Hospira would be able to sell a generic version, if approved by the FDA, once the remaining patent expires.
"The company continues to believe the acquisition of Cubist will create strong fundamental value for Merck’s shareholders," Merck said in a statement. "The combined strength of both companies will provide both incremental and long-term value, and Merck expects the transaction to add more than $1 billion of revenue to its 2015 base, with strong growth potential thereafter. The court’s decision does not change Merck’s expectation that the transaction will be neutral to modestly accretive to 2015 non-GAAP EPS. The company also continues to expect that the transaction will contribute mid-single digit accretion on a percentage basis to non-GAAP EPS in 2016, and will continue to be accretive thereafter."
Under the deal announced Monday, Merck will pay $8.4 billion in cash for Cubist shares, or $102 per share, which Merck calculated was a 35 percent premium to the Cubist average closing price for the five days before the announcement. Merck will also assume $1.1 billion in Cubist debt.
Merck is based in Whitehouse Station, N.J., and it has big operations in West Point and Upper Gwynedd in Montgomery County.
Cubist is based in the Boston suburb of Lexington, Mass.