German science and technology group Merck KGaA, Darmstadt, has agreed to acquire UK-based biotech Silence Therapeutics in an all-cash deal that values the company’s equity at about US$1.3 billion, the two companies announced on Monday. Merck will pay US$20.00 per American Depositary Share, equivalent to about US$6.67 per ordinary share, putting the enterprise value of the transaction at roughly US$1.1 billion.
The offer represents a premium of 130% to Silence’s closing ADS price on Friday, October 16, and 82% to its 30-day volume-weighted average price of US$10.99, according to Silence’s statement. Investors reacted sharply: Investing.com reported that the Nasdaq-listed shares jumped more than 125% in premarket trading on Monday.
Divesiran is the prize
At the heart of the deal is divesiran, a wholly owned small interfering RNA (siRNA) drug developed on Silence’s mRNAi GOLD platform. The therapy silences the TMPRSS6 gene in the liver, raising levels of the iron-regulating hormone hepcidin, and is being developed for phlebotomy-dependent polycythemia vera, a rare blood cancer in which the body produces too many red blood cells.
Merck described the asset as phase 3-ready. In its own release, the German group said the completed Phase 2 SANRECO study showed an 88% responder rate for divesiran against 19% for placebo, while patients on the drug needed an average of 0.2 phlebotomies over weeks 0 to 36, compared with 2.1 in the placebo group. The drug is given as a subcutaneous injection once every three months and already holds US Food and Drug Administration Fast Track and Orphan Drug designations for the condition.
Kai Beckmann, Chairman of the Executive Board and Group CEO of Merck KGaA, said the purchase “will strengthen our capabilities to serve patients with targeted specialty and rare diseases.” Danny Bar-Zohar, CEO of the group’s Healthcare business, highlighted what he called a potentially best-in-class quarterly dosing schedule.
Debt-funded, competitive process
Merck said the acquisition will be funded with proceeds from new debt. Silence’s interim principal executive officer and board chairman, Iain Ross, said the agreement followed a competitive sale process and argued it “delivers significant, immediate and certain value to our shareholders.”
The Silence board approved the transaction unanimously, and securityholders representing about 14% of the company’s voting power have signed agreements to vote in favour. Morgan Stanley and Centerview Partners are acting as financial advisers to Silence, with Cooley as legal counsel, while A&O Shearman is advising Merck.
The deal adds to a busy start to the week for European corporate activity, with Merck using the purchase to deepen its specialty and rare disease pipeline as large drugmakers continue to pay sizeable premiums for late-stage assets.
What happens next
The takeover will be carried out through a UK scheme of arrangement under Part 26 of the Companies Act 2006. It requires approval from Silence shareholders, sanction by the High Court of Justice of England and Wales, and regulatory clearances, along with other customary conditions. Silence said it will file a proxy statement with the US Securities and Exchange Commission, and both companies expect the transaction to close in the first quarter of 2027.
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