Merck KGaA Acquires SpringWorks for $3.9B

Germany's pharmaceutical giant, Merck KGaA, has finalized the acquisition of SpringWorks Therapeutics, a biopharmaceutical company focused on rare diseases, for a total of $3.9 billion. This strategic move, announced on Monday, involves purchasing SpringWorks' shares at $47 each and significantly strengthens Merck KGaA’s influence in the U.S. market, particularly enhancing its oncology division as SpringWorks contributes two approved medications and several promising candidates in the rare disease pipeline.

The initial hint of a potential acquisition emerged in early February, leading to a substantial increase in SpringWorks’ stock price, which soared to $60 per share. Consequently, the company’s market capitalization increased from $3 billion to $4 billion. As speculation waned, the company's value reverted to previous levels. However, recent negotiations reignited interest, culminating in this agreement. Merck KGaA offered a 26% premium compared to SpringWorks’ average stock price of $37.38 on February 7, just before market speculation began. Over the past week, Merck KGaA’s stock price has risen by 6%, whereas SpringWorks’ shares have surged by 21%.

Belén Garijo, CEO of Merck KGaA, described the acquisition as a significant milestone in their strategy to position the firm as a leading global force in innovation and technology. This acquisition is Merck KGaA's largest since its purchase of Sigma-Aldrich in 2015 for $17 billion. Previous significant acquisitions include Millipore in 2010 for $7 billion and Serono in 2006 for $13.3 billion.

SpringWorks Therapeutics was established in 2017, spun off from Pfizer, initially with two drugs undergoing phase 3 trials, both of which have since gained approval. Saqib Islam, SpringWorks’ CEO, expressed pride in their achievements, noting the successful U.S. launch of two top-tier drugs and their ambition to expand globally. In late 2023, SpringWorks received FDA approval for Ogsiveo, designed to treat ultra-rare desmoid tumors, marking a successful market debut with sales reaching $61 million in the fourth quarter and $172 million projected for 2024.

Furthermore, SpringWorks recently acquired FDA approval for Gomekli, a MEK inhibitor for neurofibromatosis type 1 (NF1), a rare genetic disorder. Gomekli stands out as the first treatment available for both adults and children with NF1, competing with Koselugo, a product of AstraZeneca and Merck (U.S.), which generated $631 million in sales in 2024.

SpringWorks also brings to Merck KGaA a promising pipeline, including the cancer drug brimarafenib, an RAF dimer inhibitor in collaboration with BeiGene, and SW-682, a TEAD inhibitor targeting Hippo-mutant solid tumors. Analysts at ODDO BHF have responded positively to this acquisition, highlighting its potential to rejuvenate Merck KGaA’s healthcare segment with promising growth opportunities.