The powerful antibiotics made by Cubist Pharmaceuticals Inc. originated in microbes found in soil at the base of Mount Ararat in Turkey, where legend has it that Noah’s Ark landed after the 40-day rainstorm in the book of Genesis.
Now it’s Cubist landing on a giant mountain – a $9.5 billion takeover by multinational pharmaceutical giant Merck & Co. It represents a big move by Merck to bulk up its product lines for treating hospital infections. Cubist’s drugs including cubicin are used to treat skin and blood infections and attack so-called superbugs resistant to other antibiotics. Cubist has said it plans four more big drugs by 2020.
Cubist employs about 1,000 people, including about 600 at its Lexington, Mass., headquarters. While the Merck takeover is undoubtedly a great deal for Cubist scientists who get access to Merck’s vast global size and scale to develop and market products, it’s possible the deal could lead to administrative and support jobs being consolidated or eliminated in Lexington. The companies had no comment on future employment levels.
One group that has nothing to complain about: Cubist shareholders. Merck’s all-cash bid of $102 per share represents a 37 percent premium to Cubist’s closing share price Friday. Over the last five years, Cubist’s shares have grown five-fold in value on steadily rising sales and profits. They closed Monday at $100.60 a share, indicating a Wall Street consensus the Merck deal is very likely to go through at the $102 price.
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Merck said it hopes to close the deal by the end of March.