RBC says Merck deal for Terns ‘savvy,’ but competing bidders could emerge

After Merck (MRK) hosted a conference call to discuss the proposed acquisition of Terns Pharmaceuticals (TERN), RBC Capital analyst Trung Huynh reports that the “prevailing feedback” that the firm has received from investors has been a disappointment on the deal premium received and why Terns would accept such a “modest premium” for a “high-probability asset.” Meanwhile Merck was praised “as a savvy capital allocator addressing their upcoming patent cliff,” though multiple investors don’t think this is the end and expect competing bidders to emerge or shareholders to outright reject the deal, added RBC, which has an Outperform rating and $142 price target on Merck shares.