Recasts, adds details, background from paragraph 7

By Ludwig Burger

FRANKFURT, April 28 (REUTERS) - Merck KGaA MRCG.DE has struck a deal to buy U.S. biotech company SpringWorks Therapeutics SWTX.O for an equity value of $3.9 billion, as the German company seeks to acquire treatments for rare tumours to boost its cancer drugs business.

The family-controlled company said in a statement on Monday the purchase price of $47 per share in cash represents an equity value of about $3.9 billion, equivalent to an enterprise value of $3.4 billion (3.0 billion euros), when SpringWorks’ cash holdings are deducted.

The deal is one of the largest in years for Merck, but its price tag was 22% lower than the about $60 per share analysts had expected after a Reuters report on February 10 that the companies were in advanced talks.

Merck on April 24 lowered price expectations, saying the two companies were in late-stage discussions over a bid of around $47 per SpringWorks share.

Merck's shares were down 0.4% in early trade, underperforming the broader German stock market. .GDAXI

The deal will be funded with available cash and new debt. It is expected to be accretive to Merck’s earnings per share, adjusted for special items, in 2027, said a statement from the German group, based in Darmstadt, near Frankfurt.

It added it would still be able to pursue larger transactions.

Stamford, Connecticut-based SpringWorks, which listed its shares in New York in 2019, develops drugs to treat cancer and rare types of tumour.

It has two products on the market: Ogsiveo with 2024 sales of $172 million to treat desmoid tumours, an aggressive disease affecting soft tissue, as well as Gomekli, which was approved in February to treat NF1-PN, characterised by nerve sheath tumours.

"We have the unique opportunity with SpringWorks to establish a leadership position in rare tumours and build a strong foundation for further investments in this area," Peter Guenter, head of healthcare at Merck, said.

The transaction will likely close during the second half of 2025, subject to approval of SpringWorks’ shareholders and regulatory clearance, Merck added.

TRUMP DISRUPTION

JP Morgan analyst Anupam Rama previously said the lack of other serious bidders and the challenging macroeconomic environment had probably lowered the valuation.

This year had been expected to be stellar for mergers and acqusitions in the sector until the disruption caused by U.S. President Donald Trump's policies, including massive layoffs at the U.S. Food and Drug Administration.

That has brought uncertainty to the drug approval process, hampering projected drug sales and affecting valuations.

Merck is particularly keen to strengthen its drug development pipeline after high-profile setbacks in late-stage drug trials, including a decision last year to halt development of head and neck cancer drug Xevinapant.

A major trial testing multiple sclerosis drug Evobrutinib failed in December 2023.

In 2015, the company agreed to buy U.S. lab equipment supplier Sigma-Aldrich for $17 billion, its biggest deal to date. In 2019, Merck acquired U.S. electronics materials manufacturer Versum for around $6.5 billion.

(Reporting by Ludwig Burger, Emma-Victoria Farr in Frankfurt and Sabrina Valle in New York; Editing by Kirsten Donovan and Barbara Lewis)

((ludwig.burger@thomsonreuters.com;))