Merck Inks Deal To Buy Pandion Therapeutics For $1.85B; Shares Skyrocket

Merck & Company agreed to snap up Pandion Therapeutics, a clinical-stage biotechnology company, in a deal worth $1.85 billion. Pandion shares jumped almost 133.4% to close at $59.81 on Feb. 25.

Per the terms of the deal, the pharmaceutical company will pay $60 per share in cash. Merck (MRK) will acquire all shares of Pandion through a subsidiary, which would initiate a tender offer. The tender offer will close subject to certain conditions. These include the conditions that at least a majority of the total number of Pandion’s fully-diluted common shares are tendered and the expiration of the waiting period is determined as per the Hart-Scott-Rodino Antitrust Improvements Act.  

Upon completion of the tender offer, the remaining shares of Pandion (PAND) will be canceled and converted into the right to receive at the price tag of $60 per share. The acquisition is likely to close in the first half of 2021.

Pandion CEO Dr. Rahul Kakkar said, “Pandion grew out of our founders’ personal and scientific mission to change the way patients living with autoimmune diseases are treated.”

“We are proud that Merck has recognized our team’s innovation and drive in creating a pipeline of diverse candidates that activate natural immune regulatory mechanisms and thereby have the potential to achieve better clinical responses for patients,” he added. (See Merck stock analysis on TipRanks)

Following the deal, Mizuho Securities analyst Mara Goldstein maintained a Buy rating and a price target of $100. The analyst believes “MRK is augmenting its pipeline (with two clinical, three preclinical, and four discovery programs by YE21) ahead of the expected Organon & Co. Spin off (late 2Q21) with the acquisition of autoimmune-focused company Pandion.”

The consensus rating among analysts is a Strong Buy based on 4 Buys versus 1 Hold. The average analyst price target stands at $94.40 and implies upside potential of 26.5% to current levels over the next 12 months.

Additionally, Merck scores a 9 out of 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

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