Merck Sells $8 Billion of Bonds to Fund Acceleron Acquisition

(Bloomberg) -- Merck & Co. priced an $8 billion U.S. high-grade corporate debt sale to help fund the $11.5 billion acquisition of Acceleron Pharma Inc.

Merck sold the bonds in five parts. The longest portion of the offering, a 40-year security, yields 1.1 percentage points above Treasuries, after initial discussions around 1.3 percentage points, according to a person with knowledge of the matter, who asked not to be identified as the details are private.

The order book for the deal peaked at $33 billion in the early Tuesday afternoon in New York, people familiar with the investor demand said.

Proceeds will be used for general corporate purposes, including the repayment of outstanding commercial paper borrowings in connection with the acquisition of Acceleron and other debts with upcoming maturities, the person said. The seven-year tranche is a sustainability bond, the first from the company.

Merck agreed to buy Acceleron in September, building out its portfolio of therapies to treat rare diseases. The company said at the time that the deal is expected to close in the fourth quarter and will be financed with a mix of cash and debt.

Merck has faced pressure to expand its sales beyond Keytruda, a blockbuster cancer drug that accounts for more than a third of its revenue. It’s among several companies that have been on the hunt for future blockbuster drugs through acquisitions, including Sanofi, Pfizer Inc., Amgen Inc., Gilead Sciences Inc. and Roche Holding AG.

Deutsche Bank AG, Bank of America Corp., Barclays Plc, Credit Suisse Group AG and Goldman Sachs Group Inc. managed the bond sale.

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