For $2.9B, Novartis will purchase cancer-focused MorphoSys

Pharmaceutical company Novartis AG said that it will pay 2.7 billion euros ($2.9 billion) to purchase cancer treatment developer MorphoSys AG, thereby expanding its treatment offering with a potential cure for rare bone marrow cancer.

The German biotech company's shares increased by more than 40% after it was first revealed on Monday that Novartis, a company based in Switzerland, was in advanced negotiations to purchase MorphoSys.

Following the purchase, which is subject to a number of requirements, including a minimum acceptance threshold of 65% of MorphoSys' share capital and regulatory clearances, the Swiss group would provide shareholders with 68.00 euros per share in cash and take MorphoSys private, the businesses said.

In an effort to concentrate on a smaller number of therapeutic areas and geographic markets, Novartis has been reducing expenses and hiring. Last year, the company spun off its generic medicine company, Sandoz. It has stated that transactions valued under $5 billion constitute the core of its entire mergers and acquisitions strategy.

Following the opening, Novartis shares increased by 0.5%, while Morphsys shares surged 15% to 66.10 euros. Until the deal closes, which is anticipated to happen in the first half of 2024, MorphoSys, with its headquarters located in Planegg, Germany, will carry on as a distinct and autonomous business.

One of MorphoSys' most promising medications, pelabresib, which is used to treat deadly cancers like myelofibrosis, a rare kind of bone marrow cancer, and some types of knotty lymphomas, will be owned by Novartis.

The management board and supervisory board of MorphoSys intend to advise shareholders to accept Novartis' offer, the company said in a separate statement. With a $1.7 billion acquisition from American cancer specialist Constellation Pharma, MorphoSys acquired pelabresib with the intention of establishing a new standard for treatment.