SpringWorks Therapeutics(SWTX.US) surges 34% in discussions to acquire Merck

Merck KGaA, a German company, has revealed that it is in talks to acquire SpringWorks Therapeutics, a US cancer and rare disease drugmaker. This news caused SpringWorks' stock price to soar by 34% on Monday, valuing the company at over $4bn. The two sides are reportedly close to signing an agreement in the coming weeks, according to sources. SpringWorks' drug Ogsiveo was approved in the US for the treatment of adult connective tissue tumours. Merck has repeatedly stated that it is exploring acquisitions after building up a war chest of billions of dollars during the pandemic, when it ramped up production of products for Covid-19 vaccines, therapies, and testing. The German conglomerate last signed a deal worth billions in 2019, when it bought Versum Materials Inc to support its electronics division. "No legally binding agreement has been reached and key conditions have not been met," a Merck spokesperson said in an email, adding that it was unclear whether a deal would be done. The company's pharmaceutical division has faced challenges after the failure of several experimental drugs and the impending expiry of patents on its best-selling multiple sclerosis drug Mavenclad. Michael Shah, an analyst at Bloomberg, said in a note that the acquisition of SpringWorks would bolster Merck's oncology business, adding up to €1.5bn ($1.5bn) in annual sales by 2030.