The deal has an equity value of more than $8 billion, and could be announced as soon as Monday, the people said.
The New York Times reported earlier Friday evening a deal was likely to be announced as soon as next week. The plans are not finalized and talks could still break up, the people said.
The move would give Merck access to Cubist's medicines, administered primarily in hospitals. Cubist sells the nearly billion-dollar a year antibiotic Cubicin, as well as a slate of other drugs for bacterial infections and a medicine to aid recovery from bowel surgery.
Cubist is one of few drugmakers with a major focus on antibiotics, a neglected area of drug development in recent years; the company last year acquired smaller antibiotics makers Trius and Optimer.
A decision is expected from the Food and Drug Administration later this month on another antibiotic, Zerbaxa, which RBC Capital Markets analyst Adnan Butt estimates could draw $1 billion in peak annual revenue.
Merck and Cubist didn't immediately respond to requests for comment outside normal business hours.