Terns of Foster City, California, is currently developing a drug to treat certain patients with chronic myeloid leukemia, which is a slow growing type of blood cancer that leads to an overproduction of white blood cells that accumulate in the blood and bone marrow, disrupting the production of healthy blood cells.
A Merck subsidiary will pay $53 per share in cash for each Terns share.
Terns' stock rose more than 5% in early trading Wednesday. Merck shares were up less than 1%.
Both companies' boards have approved the transaction, which is expected to close in the second quarter. The deal is subject to a majority of Terns’ stockholders tendering their shares in a tender offer that will be initiated by a Merck subsidiary.
Rahway, New Jersey-based Merck said it will book a charge of about $5.8 billion, or approximately $2.35 per share, related to the acquisition in its second-quarter and full-year results.
Last year Merck announced that it was buying Verona Pharma, a company that focuses on respiratory diseases, in an approximately $10 billion deal.