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Merck in advanced talks to buy Seagen in nearly $40-billion deal - WSJ

Stock Markets Jul 07, 2022 10:27AM ET
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2/2 © Reuters. FILE PHOTO: Signage is seen at the Merck & Co. headquarters in Kenilworth, New Jersey, U.S., November 13, 2021. REUTERS/Andrew Kelly 2/2

(Reuters) -Drugmaker Merck & Co is in advanced talks to buy cancer-focused biotech company Seagen Inc in a deal that could be worth roughly $40 billion or more, the Wall Street Journal reported on Wednesday.

The companies are discussing a price above $200 a share for Seagen, the report said, citing people familiar with the matter. (https://on.wsj.com/3uu3tMa)

At Wednesday's closing share price of $175, Seagen has a market capitalization of $32.24 billion, according to Refinitiv data.

Merck did not immediately respond to a Reuters request for comment outside business hours, while Seagen declined to comment.

Seagen's shares rose about 5% to $184 in premarket trading, while Merck fell 1%.

It makes sense if Merck can close the deal at $250 or below as the acquisition will help the drugmaker fortify its portfolio ahead of top money-spinner Keytruda losing its marketing exclusivity, Wells Fargo (NYSE:WFC) analyst Mohit Bansal said.

Cancer drug Keytruda, set to lose exclusivity in 2028, generated sales of $17.2 billion in 2021 and accounted for 35.2% of Merck's total revenue.

Seagen has several clinical-stage oncology candidates, as well as four approved drugs including breast cancer therapy Tukysa, which together brought in more than $1 billion in revenue last year.

The companies are seeking to seal the deal on or before the announcement of Merck's second-quarter earnings set for July 28, according to the WSJ report.

The acquisition talks come at a time when several big corporate deals have been shelved as a downturn in equity markets hurts company valuations, while rising borrowing costs make deal financing costlier and harder to access.

Walgreens Boots Alliance (NASDAQ:WBA) in June scrapped its plan to sell its UK pharmacy chain Boots, while U.S. department store chain Kohl's (NYSE:KSS) last week called off its sale to Franchise Group (NASDAQ:FRG) after months of negotiations.

Bansal, however, said Merck's balance sheet capacity would not be an issue for the deal.

Merck in advanced talks to buy Seagen in nearly $40-billion deal - WSJ
 

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