Verona Pharma Stock Jumps 20% on $10B Buyout Offer From Merck

Group 1 - Verona Pharma (VRNA) has entered into a definitive agreement with Merck (MRK) for the acquisition of all outstanding shares at $107 per American depositary share, valuing the deal at approximately $10 billion [1][7] - The acquisition will allow Merck to add Ohtuvayre, Verona's first marketed drug for chronic obstructive pulmonary disease (COPD), which is the first inhaled therapy with a new mechanism of action for COPD in over 20 years [2][8] - The deal is expected to close in the fourth quarter and has been unanimously approved by the boards of both companies [3] Group 2 - Following the announcement, shares of Verona surged by 20% in pre-market trading, with a year-to-date increase of 87%, contrasting with a 3% decline in the industry [4] - Merck's motivation for the acquisition is to diversify its revenue base, which is heavily reliant on Keytruda, accounting for nearly 46% of its total revenues in 2024 [6] - This acquisition marks Merck's largest since its $10.8 billion purchase of Prometheus Bioscience in 2023, strengthening its position in the respiratory disease market [8] Group 3 - Merck has been actively pursuing licensing deals with Chinese biotechs, including multi-billion-dollar agreements with Hansoh Pharma, LaNova Medicines, and Hengrui Pharma [9] - Recent M&A activity in the pharmaceutical sector indicates a trend where major companies are seeking strategic assets in key growth areas despite broader macroeconomic challenges [10] - Other notable transactions include Sanofi's $9.5 billion acquisition of Blueprint Medicines and Eli Lilly's intent to acquire Verve Therapeutics for up to $1.3 billion, highlighting the ongoing interest in small biotechs with innovative assets [11][12]