Merck & Co (MRK) M&A announcement summary

Deal rationale and strategic fit

• Acquisition strengthens and diversifies the hematology and oncology pipeline, focusing on chronic myeloid leukemia (CML) and leveraging a science-led strategy for sustainable long-term growth.

• TERN-701, a next-generation allosteric tyrosine kinase inhibitor, targets unmet needs in CML with high selectivity, improved therapeutic index, and potential best-in-class efficacy and safety, including for patients with prior TKI treatment failure.

• The deal aligns with the strategy to address significant unmet needs with innovative science and complements existing hematology assets, enhancing long-term shareholder value.

• TERN-701 is expected to be a multi-billion dollar commercial opportunity and a key growth driver in the next decade.

• The acquisition leverages existing commercial and clinical infrastructure and expertise to maximize value creation and advance TERN-701.

Financial terms and conditions

• Acquisition price is $53 per share in cash, valuing Terns at approximately $6.7 billion, or $5.7 billion net of cash and securities.

• Represents a 31% premium to the 60-day and 42% premium to the 90-day volume-weighted average stock price as of March 24, 2026.

• Transaction will be financed primarily through new debt, with no expected impact on credit rating.

• The deal will be accounted for as an asset acquisition, resulting in a $5.8 billion R&D charge in 2026 and a $0.17 EPS impact in the first 12 months.

• Expected to close in Q2 2026, subject to majority share tender and regulatory approvals.

Synergies and expected cost savings

• TERN-701 complements the existing hematology pipeline and is expected to benefit from established commercial and clinical capabilities.

• Integration with ongoing launches and pipeline assets is anticipated to drive operational efficiencies.

• Transaction is expected to deliver growth early in the next decade, leveraging the combined hematology pipeline.

• Patent exclusivity for TERN-701 in the U.S. anticipated to extend into the 2040s, supporting durable revenue streams.

• TERN-701 is expected to improve efficacy, safety, and convenience over existing CML treatments, potentially offering a differentiated therapeutic option.