Pharmaceutical leader Merck said Wednesday it will acquire Terns Pharmaceuticals in an all-cash transaction priced at $53.00 per share, giving Terns an approximate equity valuation of $6.7 billion. After accounting for cash on Terns' balance sheet, the purchase represents about $5.7 billion net of acquired cash. Merck noted the bid represents a premium of 31% to the 60-day volume-weighted average price and 42% to the 90-day volume-weighted average price on Tuesday.
The acquisition is built around Terns' lead investigational candidate, TERN-701, described by the companies as a novel investigational oral allosteric BCR::ABL1 tyrosine kinase inhibitor. TERN-701 is in clinical testing within the Phase 1/2 CARDINAL trial for patients with Philadelphia chromosome-positive, chronic phase chronic myeloid leukemia who have previously received at least one prior tyrosine kinase inhibitor and who experienced treatment failure, a suboptimal response or treatment intolerance. In March 2024, the Food and Drug Administration granted Orphan Drug Designation for TERN-701 for the treatment of chronic myeloid leukemia.
In published clinical observations to date, TERN-701 has demonstrated activity, with encouraging rates of major molecular response and deep molecular response seen by week 24. Commenting on the deal, Robert M. Davis, chairman and chief executive officer at Merck, said: "The acquisition of Terns builds on our growing presence in hematology with TERN-701, a potential best-in-class candidate for the treatment of certain patients with chronic myeloid leukemia. This transaction further diversifies and strengthens our position in oncology as we continue to look for opportunities to broaden our portfolio into other therapeutic areas."
Amy Burroughs, chief executive officer at Terns, reaffirmed the company's development focus: "By working together, we will advance TERN-701, leveraging the deep expertise and significant resources at Merck, a global biopharmaceutical leader with a proven track record of delivering cancer breakthroughs for patients who need them most."
The transaction received approval from the Boards of Directors of both Merck and Terns. The acquisition will proceed through a tender offer to be launched by a Merck subsidiary, and closing is conditioned on a majority of Terns' stockholders tendering their shares. Additional closing contingencies include expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and other customary conditions.
Merck indicated the deal will be accounted for as an asset acquisition and is expected to close in the second quarter of 2026. As part of its 2026 financial reporting, Merck expects to record a charge related to the transaction of approximately $5.8 billion, or roughly $2.35 per MRK share. That charge will be included in both second quarter and full year 2026 GAAP and non-GAAP results.
On the market response, shares of Terns, which closed at $50.00 on Tuesday, rose by more than 5% in pre-market trading on Wednesday following the announcement. Shares of Merck (MRK) were up 0.4% in pre-market trading after the deal was disclosed.
This acquisition highlights Merck's continued investment in hematology and oncology assets, driven specifically by an investigational therapy with early clinical signals. The structure of the deal - a cash tender offer subject to regulatory clearance and shareholder acceptance, and accounted for as an asset purchase with a large one-time charge - will have accounting and near-term earnings implications for Merck while positioning it to further develop TERN-701 within its oncology portfolio.