German Merck plays hardball to get SpringWorks

Merck KGaA has finally closed the deal to buy SpringWorks, nearly three months after rumours of an acquisition began. Wrangling over the price could lie behind the delay; Merck will pay $47 per share ($3.4bn in total), a 27% premium to SpringWorks’ price on 7 February, the day before speculation first arose, but just 5% above Friday's close. SpringWorks might have been pushing for more, using as leverage a share price that rose to nearly $60 following the rumours. But Merck maintained that it would stay disciplined on M&A, and it has seemingly stuck to its guns. During its fourth-quarter earnings call in March it said it would only pursue “clear-cut, low-risk deals that create value from early on”. With SpringWorks Merck will get two approved rare disease drugs: Ogsiveo for desmoid tumours and Gomekli for neurofibromatosis type 1-associated plexiform neurofibromas. Merck noted a good fit with pimicotinib, the tenosynovial giant cell tumour project it licensed from Abbisko, most recently on a global basis. Pimicotinib prevailed in phase 3 last year, but there has been no news yet of regulatory filings. Other Merck deals haven’t always panned out, so investors will no doubt appreciate the group’s measured approach.

SpringWorks’ pipeline

Note: NF1-PN=neurofibromatosis type 1 with plexiform neurofibromas. Source: OncologyPipeline.