In a deal valued at approximately $9.5 billion ($8.4 million in cash and $1.1 in assumed debt), Merck’s acquisition of Cubist was originally expected to result in significant EPS gains by 2016. At least, that was the plan. Mere hours after Merck’s announcement, a U.S. court invalidated four of Cubist’s five key patents on Cubicin, the antibiotic responsible for 80% of the company’s revenue. The decision effectively allows generic production of Cubicin as early as June 2016, four and half years before the original patent expirations in November 2020.
