Merck & Co. (NYSE:MRK) and Cubist Pharmaceuticals Inc. (NASDAQ:CBST) – A Feared Duo for Rivals


Pharmaceutical market is hot these days with companies trying to expand their portfolios and roll out drugs in manifold to the market. Pharmaceutical behemoth, Merck & Co. (NYSE:MRK) has finalized the acquisition of Cubist Pharmaceuticals Inc. (NASDAQ: CBST) for $9.5 billion. The deal comes for $102 a share, including $1.1 billion of Cubist Pharmaceuticals Inc. (NASDAQ:CBST)’s net debt and miscellaneous. The all cash offer was more than what Cubist Pharmaceuticals Inc. (NASDAQ:CBST) had asked for. The deal will go through the regulatory department’s observation and it is expected to be sealed in the first quarter of 2015.

Cubist Pharmaceuticals Inc. (NASDAQ:CBST) is famous for its antibiotics treating hospital-spawned infections. The company made over 1 billion dollar last year, that too from sales. Merck (NYSE:MRK) will be more than grateful to have Cubist Pharmaceuticals Inc. (NASDAQ:CBST) under its wing. It will expand Merck (NYSE:MRK)’s portfolio and add numerous drugs to its pipeline. That will increase its chances a little more as to become the largest pharmaceutical company in the country, in terms of success.

Merck (NYSE:MRK) is banking upon the hospital trend of positive regulatory environment and considers Cubist (NASDAQ:CBST) the right weapon of choice to treat the environment-spawned diseases, especially borne out of hospitals. What’s great about Cubist (NASDAQ:CBST) is the fact that it has drugs that are approved by the Food and Drug administration and now all of them will come under Merck (NYSE:MRK) . With the expertise of Merck (NYSE:MRK), these drugs could create a big impact on the market and make the nexus of Merck (NYSE:MRK) and Cubist (NASDAQ:CBST) a formidable one.

The other thing about Cubist Pharmaceuticals Inc. (NASDAQ:CBST) is that it is in a great shape as far as stock market is concerned. Its stock price went up by 36 percent in the premarket trading on Monday. And as far as Merck & Co. (NYSE:MRK) is concerned, it was down by 0.2 percent, which is negligible.

It’s a smart move by Merck & Co. (NYSE: MRK); the company has been observing Cubist (NASDAQ:CBST)’s growth in the past couple of years, which comes with very attractive future prospects. It’s not large in scope but the company’s capabilities are beyond what we call good. A merger with the country’s second largest drug company will compliment Cubist Pharmaceuticals Inc. (NASDAQ: CBST) in a way that it will become a household name in the country.

As for Merck & Co. (NYSE:MRK), it has played a smart move against its rivals. Planning an acquisition such as this requires thorough analysis and Merck & Co. (NYSE:MRK) has been doing that for years. Now with Cubist Pharmaceuticals Inc. (NASDAQ:CBST) under its wing, who knows what Merck & Co. (NYSE: MRK) will be brewing in its pipeline, what kind of and how many drugs it will be rolling out per year for approval and eventually to the market? We forecast great days ahead for the Merck & Co. (NYSE:MRK) and Cubist Pharmaceuticals Inc. (NASDAQ:CBST) and a long lasting reign over the pharmaceutical industry.