Bloomberg Intelligence Podcast

Episode: Merck to Acquire Terns Pharmaceuticals in $6.7 Billion Deal
Date: March 25, 2026
Hosts: Paul Sweeney and Scarlet Fu

Episode Overview

This episode dives into Merck’s headline-grabbing acquisition of Terns Pharmaceuticals in a $6.7 billion deal, spotlighting the strategic implications for Merck as it navigates patent expirations and future growth in the blood cancer market. The podcast also covers notable M&A trends in pharma, provides updates on media sector shakeups (Disney & Netflix), reviews Chewy’s strong earnings and competitive strategy, and explores emerging trends in food and restaurant industries amid rising costs.

Key Segment Summaries & Insights

1. Merck Acquires Terns Pharmaceuticals ($6.7 Billion)

[02:07 – 06:02]

Main Discussion Points

• Strategic Rationale:

  • Merck is acquiring Terns as a move to reinforce its drug pipeline, especially as its blockbuster Keytruda (representing $31 billion, or half, of its sales) is nearing patent expiration.
  • The Terns acquisition is a bet on a late-stage, not-yet-approved drug that could potentially have “peak sales of several billion dollars,” positioning Merck for continued growth post-Keytruda.

• Market Reactions:

  • Merck's stock rose on the news, an atypical reaction for a buyer in M&A — investors are signaling support for this deal and potentially more like it.
  • The premium paid is 6% above Terns’ last close ($53/share), leading some analysts to speculate whether this leaves room for rival bids.

• M&A Appetite:

  • Merck’s CEO, Rob Davis, expressed interest earlier in the year at the J.P. Morgan Health Care Conference in executing “several deals in the tens of billion dollar range,” indicating ongoing acquisition activity.

• Deal Advisors:

  • Terns was advised by Centerview Partners and Jefferies, both now significant players in the M&A space.

• Regulatory Risk:

  • Minimal risk anticipated due to Terns not having an approved drug, and its leading competitor being Novartis. Recent regulatory scrutiny (e.g., Amgen/Horizon) is unlikely to apply here.

Notable Quotes

• “For Merck, it’s a bet that at the end of the decade, around the same time that [Keytruda] is going off patent, they will have this drug coming in to help fill some of that hole.” – Merck Analyst [02:29]
• “Shares are up…investors are applauding this and they want Merck to keep doing stuff like this.” – Merck Analyst [03:28]
• "There could be an argument that maybe there is some built-in M&A speculation already baked into the price. But you never know." – Merck Analyst [04:17]

2. Media & Tech: Disney's AI Deal Unravels, Netflix Doubles Down on Live

Disney and OpenAI Sora Deal Falls Apart

[08:24 – 10:21]

• Disney’s new CEO, Josh D’Amaro, was blindsided as a $1 billion deal with OpenAI (to develop AI-generated shows featuring 200 Disney characters) collapsed only days into his tenure.
• The failure poses challenges to Disney’s bid to maintain “franchise fandom” amid rising competition and digital engagement demands.

Quote:

• “This falling apart definitely kind of leaves Disney… they were blindsided. They’ve been trying to do different things in terms of really monetizing their IP; creating this franchise fandom.” – Geetha Ranganathan (Media Analyst) [08:54]

Netflix’s Foray into Live Events & Sports

[10:21 – 14:53]

• Netflix scored a major hit with the live BTS comeback show (18M+ viewers), highlighting engagement as a crucial metric.
• The company is increasing its content spending by $2 billion (up to ~$20B) to chase event-driven and sports content.
• Netflix is pivoting into sports cautiously—big wins in WWE, NFL Christmas games, and the World Baseball Classic (31M global viewers).
• Sports rights in the US are skyrocketing ($40B+ annually); Netflix eyes international opportunities and incremental forays, with speculation that they may eventually secure a major NFL Sunday package.

Quotes:

• “Their sports strategy has been very, very calculated, very, very measured… making really calculated bets, again, you can build that buzz and for them, really build that critical engagement metric.” – Geetha Ranganathan [12:28]
• “If you’re just looking this year at sports rights, companies are spending over $40 billion just this year across the board for US sports rights. And we’re only looking at that going up further.” – Geetha Ranganathan [13:40]

3. Chewy Earnings: Subscription Power & Competitive Edge

[17:20 – 22:40]

Highlights

• Chewy posted forecast-beating results; stock jumped 10–12% on the news, despite being down ~20% YTD.
• Their business model relies heavily on “auto ship” subscriptions: 80–84% of revenue is recurring, sticking customers in the Chewy ecosystem.
• Chewy claims about ⅓ of the US e-commerce pet market, matching up well even against Amazon and Walmart.
• Diversifying: Now offering pet pharmacy and vet locations (18 so far), aiming for deeper customer engagement.
• Growth levers: Most sales growth going forward is expected from increasing active users more than price hikes.
• Excellent free cash flow ($700M in 2026, projected $850M in 2027); reinvestment priorities are business expansion and some share repurchase.
• Margin improvement strategies include automation in distribution centers, pushing premium brands, private-label expansion, and growing non-merchandise revenue.

Quotes:

• “Once you enter the Chewy environment, it’s difficult for you to leave. They have about 80, 84% of their revenue comes from auto ship. So…it’s subscription-based.” – Ana Rosarito Pena [18:04]
• “There are not many companies out there that can say they have a third of a market where you compete against an Amazon and a Walmart.” – Paul Sweeney [18:50]
• “We actually expect that most of the growth in sales is probably going to come from active consumers rather than pricing.” – Ana Rosarito Pena [20:17]

4. Food, Restaurants & Consumer Trends

[25:02 – 29:52]
Guest: Justin Pride, VP at Revenue Management Solutions

Conference Insights & Menu Trends

• Rising input costs (especially fertilizer and proteins) are being closely monitored; operators are adjusting menus and pricing.
• “Protein” has become a retail buzzword, influenced significantly by millennial preferences and dietary trends pushing protein-rich options.
• Health, satisfaction, and active lifestyle are the three most cited reasons diners seek protein in menus.
• Restaurants increasingly feature global and trendy ingredients (matcha, ube, Dubai chocolate) to drive social buzz, create “Instagram-able” moments, and lure customers—often as short-term promotions to balance excitement with core menu reliability.

Quotes:

• “About 85% of menu items are just the core chicken, beef, pork type of items…these are becoming more important to consumers.” – Justin Pride [26:58]
• “Affordability is a total thing for guest visits and transactions being more of a fight for share…social media aspects, the photographing, let the camera eat first type of principle.” – Justin Pride [28:44]

Timestamps for Key Segments

• Merck Acquisition Analysis: [02:07 – 06:02]
• Disney Media Deal Fallout / Netflix Event Strategy: [08:24 – 14:53]
• Chewy Financials and Strategy: [17:20 – 22:40]
• Food & Restaurant Trends Panel: [25:02 – 29:52]

Memorable Moments

• M&A Win for Merck: Merck’s stock boost post-announcement was celebrated:
  “Shares are up…investors are applauding this and they want Merck to, to keep doing stuff like this.” [03:28]
• Netflix & Sports Rights: Anticipation brewing on when (not if) Netflix will land a major NFL deal:
  “To me, the defining moment will be when Netflix takes a Sunday package from the NFL. The NFL. And Geetha, I think that's. That day is coming. What do you think?” – Paul Sweeney [14:06]
• Chewy’s E-Commerce Dominance:
  “There are not many companies out there that can say they have a third of a market where you compete against an Amazon and a Walmart…” [18:50]

Tone and Style

• Analytical and Informal: The dialogue is brisk, keenly analytic, and often peppered with wry humor (“we should call it M&A Wednesday now…”).
• Direct and Engaged: Complex industry trends are broken down in plain terms with insider perspectives and candid observations from experienced guests.

For those seeking a snapshot of major stories moving markets—from pharma M&A to content strategies and consumer shifts in retail and food—this episode delivers lively, in-depth analysis straight from Bloomberg’s top sector experts.