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Strategic Acquisition Targets Rare Tumour Treatments
Germany’s Merck KGaA has reached an agreement to acquire U.S.-based biotech company SpringWorks Therapeutics for an equity value of approximately $3.9 billion. The move underlines Merck’s efforts to strengthen its presence in oncology, particularly in the niche area of rare tumours.
Under the terms of the agreement, Merck will pay $47 per share in cash. After accounting for SpringWorks' cash holdings, the enterprise value of the deal stands at about $3.4 billion. Merck stated that the acquisition will be financed through a combination of existing cash reserves and new debt. The company expects the transaction to be accretive to earnings per share, excluding special items, beginning in 2027.
Context of the Deal
Merck’s announcement comes after several months of negotiation. Early market speculation in February 2025 suggested a higher valuation closer to $60 per share, but later developments indicated a lower final offer. On April 24, Merck confirmed that discussions were centered around a $47 per share bid, a valuation reflecting current market realities.
Despite the reduced price, Merck shares gained 1.2% in early trading following the announcement, signaling investor support for the strategic rationale behind the move.
SpringWorks Therapeutics, headquartered in Stamford, Connecticut, develops treatments for cancers and rare tumours. The company, which went public in 2019, has two approved therapies: Ogsiveo, which generated $172 million in sales in 2024, and Gomekli, recently approved to treat NF1-PN, a condition involving nerve sheath tumours.
Expanding the Oncology Portfolio
Merck has outlined plans to use the SpringWorks acquisition to build a leadership position in the treatment of rare tumours. The company highlighted the potential to use this foundation for further investment in rare oncology conditions, a strategy that fits with its broader ambitions in the healthcare sector.
SpringWorks’ existing product portfolio, combined with its ongoing development programs, provides Merck with an opportunity to diversify its pipeline at a time when several of its internal programs have faced setbacks.
Notably, Merck halted the development of Xevinapant, a drug candidate for head and neck cancer, after disappointing late-stage results. In another setback, the company discontinued trials for its multiple sclerosis treatment Evobrutinib following negative outcomes in December 2023.
Market Conditions and Potential Challenges
The biotech mergers and acquisitions market has experienced significant turbulence in 2025. Analysts had anticipated a strong year for deal-making, but policy disruptions under U.S. President Donald Trump's administration, including extensive layoffs at the Food and Drug Administration, created new regulatory uncertainties. These challenges have affected drug approval timelines and depressed company valuations across the sector.
Market analysts, including those at JP Morgan, have suggested that the macroeconomic environment and the absence of competing bids contributed to SpringWorks accepting a lower offer. However, some industry observers have noted that the agreed price could still attract attention from potential rival bidders.
According to research from MKP Advisors, the market may interpret the relatively modest premium as an opportunity for other firms to consider counteroffers. Merck’s offer represents a 26% premium over SpringWorks’ 20-day average share price prior to initial reports of a potential deal.
Funding Strategy and Future Outlook
Merck plans to finance the acquisition through a combination of internal resources and newly issued debt. The company emphasized that despite this sizeable commitment, it remains financially positioned to pursue larger strategic opportunities if they arise.
The acquisition, expected to close in the second half of 2025, is contingent on shareholder approval and regulatory clearance. If completed, it will rank among Merck’s largest transactions since its $17 billion purchase of Sigma-Aldrich in 2015 and the $6.5 billion acquisition of Versum in 2019.
The deal with SpringWorks reflects Merck’s intention to rebuild its healthcare division’s growth trajectory after recent clinical trial failures. By targeting a specialist biotech with approved therapies and a clear focus, Merck aims to reduce development risk and establish a more stable revenue stream in a challenging environment for drug innovation.
