NEW YORK (TheStreet) -- Shares of Cubist Pharmaceuticals (CBST) are up 36.01% to $101.14 in pre-market trade after it was reported that Merck & Co. (MRK) agreed to buy the company for $8.4 billion in cash to add products to help fight the growing threat of drug-resistant bacteria, Bloomberg reports.
Merck will begin a $102-a-share tender offer for Cubist, the companies said in a statement today. The price is 37% above Cubist's closing share level on Dec. 5. Including $1.1 billion of net debt, the deal is valued at about $9.5 billion.
Cubist has said it plans to introduce four new drugs by 2020 to combat bacterial infections that are resistant to other treatments because of overuse. The rising threat of drug-resistant bugs has spurred public health authorities to urge companies to invest in new antibiotics, a field drugmakers had largely abandoned to focus on more profitable therapeutic areas such as cancer or hepatitis C, Bloomberg said.
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TheStreet Ratings team rates CUBIST PHARMACEUTICALS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate CUBIST PHARMACEUTICALS INC (CBST) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, robust revenue growth, good cash flow from operations, increase in stock price during the past year and impressive record of earnings per share growth. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."