Merck KGaA to buy Silence Therapeutics for $20 per ADS in cash

what happened

Germany's Merck KGaA has agreed to take over London-based Silence Therapeutics in a fully cash transaction, Barron's reported. The deal carries an enterprise value of $1.1 billion and an equity value of about $1.3 billion. Silence holders will receive $20 for each American depositary share, roughly $6.67 per ordinary share.

The offer represents a 130% premium to Silence's Friday close and an 82% premium to its 30-day volume-weighted average price. After a brief trading halt, the U.S.-listed stock jumped almost 126% to $19.59, heading for its biggest one-day percentage rise on record. Merck's Frankfurt shares slipped 1.6%.

The acquisition gives Merck full control of Silence's siRNA platform and its lead drug Divesiran, which targets polycythemia vera, a rare, slow-growing bone marrow disorder. Merck has not previously done a clinical-stage siRNA therapy deal of this kind, although it has long held research interests in the field.

why it matters

For Merck, the deal is another healthcare purchase, following its roughly $11.3 billion agreement for Bio-Techne in June and its earlier SpringWorks acquisition. At the end of June the company held 1.96 billion euros in cash and equivalents plus 3.12 billion euros in short-term financial assets. Given debt above 12 billion euros, Barron's says the $1.3 billion price can be comfortably absorbed by its existing resources.

market impact

Silence Therapeutics: the premium supports its shares; Merck KGaA: the deal weighs slightly on its stock price

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