The German drugmaker agreed to buy the British RNA medicines company for $20 per American depositary share in cash, an equity value of about $1.3 billion. Silence's ADSs jumped to about $19.59. The headline premium is measured from a price that had fallen by nearly half since the company's best clinical data.
Silence Therapeutics shareholders are getting more than double what their stock was worth on Friday. Whether that is a full price depends on which Friday you pick.
Merck KGaA, Darmstadt, Germany, has agreed to acquire Silence for $20.00 per American depositary share in cash, or $6.6667 per ordinary share, the companies said on Monday. Each ADS represents three ordinary shares. By the companies' figures, Silence's equity is worth about $1.3 billion and the business, net of cash, $1.1 billion. The deal will be carried out through a U.K. scheme of arrangement, and Silence's board has recommended it.
The price is 130% above Silence's close of $8.68 on Oct. 16 and 82% above its 30-day volume-weighted average of $10.99. The ADSs traded at about $19.59 by early afternoon, up about 126% and roughly 2.1% below the cash price. Biotech benchmarks rose about 1.3% to 2.4%.
The base that matters
Silence's stock was not always this cheap. On Aug. 10, the day the company released Phase 2 data for divesiran, its treatment for the blood cancer polycythemia vera, the ADSs closed at $15.43 on volume of about 16 million shares. The trial showed a response rate of 88%. From there the stock slid about 44% to Friday's close.
Measured against that August close, Merck KGaA's offer is a premium of about 30%, by this publication's arithmetic. Against the early-September level of about $14.79, it is about 35%.
What Merck KGaA is buying
The deal centers on divesiran, which Silence plans to dose every 12 weeks. A competing drug from Takeda and Protagonist Therapeutics won U.S. approval in the same disease in August and is self-injected weekly. Divesiran's Phase 3 trial has not yet started.
The rest of Silence's pipeline has thinned. Hansoh opted out of a partnership on one program, and AstraZeneca handed back another. Iain Ross, Silence's chairman and interim principal executive officer, said the deal "is the result of a competitive sale process." Kai Beckmann, Merck KGaA's chief executive, cited the company's acquisition of SpringWorks Therapeutics last year.
The protections
The deal terms leave room for another bidder in principle. The termination fee is $13 million, about 1% of equity value. Silence can walk away before the shareholder vote to accept a superior proposal. Holders of about 14% of the voting power have signed support agreements, against a scheme that needs 75% approval by value. There is no financing condition. Closing is expected in the first quarter of 2027, after U.S. and German antitrust approvals and a court sanction.
Market implications
One reading is that Silence's holders are getting full value for a single asset that is second to market. The board ran a sale process, the price more than doubles Friday's level, a large buyer is removing development risk, and an approved competitor already exists.
A second reading is that the company is being sold near the bottom of a post-data slump. The 130% headline flatters a depressed base, the premium over the post-data price is modest, and any payoff from a successful divesiran Phase 3 would now accrue to Merck KGaA.
The 2% spread suggests the market expects the deal to close at $20 and does not expect a higher bid.
What to watch
The scheme document, whose background section will show how many bidders took part and at what prices; the scheme meeting; antitrust clearances; and the gap between the stock and $20. A spread that turns negative would signal that traders see a chance of a better offer.