Merck and SpringWorks: A Strategic Acquisition in Oncology and Rare Diseases?

The potential acquisition of SpringWorks Therapeutics by Germany’s Merck KGaA has sparked significant interest in the biopharma sector. With a reported valuation of up to $5.7 billion, the deal could reshape Merck’s oncology and rare disease pipeline—if finalized. But what lies behind the negotiations, and what does this mean for investors?

Deal Overview: Valuation Disputes and Strategic Stakes

Merck’s pursuit of SpringWorks has been marked by fluctuating valuations and delays. Initial reports suggested a $3.5 billion deal at $47 per share, but SpringWorks’ shares briefly surged to $54, implying a $4 billion valuation. Analysts like Wedbush even floated a $77 per share price tag, which would value the company at $5.7 billion. As of March 2025, no binding agreement had been reached, with Merck emphasizing that the deal was still “not certain.”

The delay stems from unresolved pricing disputes and Merck’s cautious M&A approach. The company’s CEO, Belén Garijo, has repeatedly stressed a focus on “clear-cut, low-risk deals,” a stance that may have slowed negotiations. Meanwhile, Merck’s acquisition of Abbisko Therapeutics’ pimicotinib in March 2025—though smaller at $85 million—highlighted its oncology priorities but also raised questions about whether SpringWorks has taken a backseat.

Strategic Rationale: Filling Gaps in Oncology and Rare Diseases

Merck’s interest in SpringWorks is clear: access to two promising therapies. Ogsiveo (nirogacestat), approved for desmoid tumors, generated $172 million in U.S. sales in 2024, with projections of $1.2 billion by 2030. Mirdametinib, pending FDA approval for neurofibromatosis type 1, could become the first treatment for the disease in both adults and children, competing with AstraZeneca’s Koselugo.

These assets align with Merck’s oncology growth strategy. Despite a $9.2 billion healthcare division in 2024, Merck has faced setbacks, including failed late-stage trials for evobrutinib and xevinapant. SpringWorks’s pipeline would diversify its portfolio and bolster its position in rare diseases, a high-margin segment.

Market Context: A Resurgent M&A Landscape

The healthcare sector saw a M&A revival in 2025, with J&J’s $14.6 billion acquisition of Intra-Cellular Therapies and Bain Capital’s $3.3 billion purchase of Mitsubishi Tanabe Pharma. Merck’s potential deal with SpringWorks would be smaller than these but strategically significant.

SpringWorks’s $462 million cash reserves and strong balance sheet (enabling it to self-fund through mid-2026) add to its appeal. However, regulatory hurdles remain: the FDA’s decision on mirdametinib, expected by early 2025, could make or break the drug’s commercial viability.

Risks and Challenges: Valuation Gaps and Competing Bids

The deal’s biggest hurdle is the price tag. SpringWorks’s canceled investor meeting in March 2025 and Merck’s silence suggest unresolved gaps between the two parties’ expectations. Analysts like Cory Kasimov speculate that SpringWorks might be holding out for a higher offer, while Merck seeks to avoid overpaying.

Additional risks include:
- Regulatory Delays: A delayed or rejected mirdametinib approval could undermine SpringWorks’s value.
- Competing Bidders: The canceled investor meeting hints at potential interest from rivals, though no concrete bids have emerged.
- Integration Challenges: Merck’s past struggles, like the $17 billion Sigma-Aldrich acquisition in 2015, serve as a cautionary tale.

Conclusion: A High-Stakes Gamble with Long-Term Payoffs

Merck’s acquisition of SpringWorks is a high-risk, high-reward move. The deal’s success hinges on closing valuation gaps and securing regulatory approvals. If finalized, it would provide Merck with two commercial-stage assets in high-growth therapeutic areas, potentially offsetting its recent setbacks.

Investors should weigh the following data:
- SpringWorks’s Potential: $1.7 billion in combined sales by 2030 (per GlobalData).
- Merck’s Capacity: A $63 billion market cap and disciplined M&A approach, but a history of integration challenges.

The $47–$77 per share range reflects uncertainty, but SpringWorks’s pipeline justifies a premium. With Merck’s shares down 5% year-to-date and SpringWorks trading near $50, the deal’s resolution could catalyze volatility. For now, the wait continues—but the stakes are undeniably high.

In a sector hungry for growth, this deal could be transformative—or another cautionary tale. The next few months will reveal whether Merck and SpringWorks can bridge their differences.