By Donald Zuhn --
The new year has witnessed yet another blockbuster biotech/pharma deal. On the heels of Pfizer's $68 billion acquisition of Wyeth (see "Pfizer Expected to Announce Wyeth Acquisition on Monday") in January, Merck & Co., Inc. and Schering-Plough Corp. announced today that their Boards of Directors had unanimously approved a definitive merger agreement under which Schering-Plough shareholders will receive 0.5767 shares and $10.50 in cash for each share of Schering-Plough stock and each share of Merck stock will become a share of the combined company. Based on the March 6, 2009 closing price of Merck stock, Schering-Plough shareholders will receive stock and cash valued at $23.61 per share, or $41.1 billion total. The cash portion of the deal will be financed through a combination of $9.8 billion from existing cash reserves and $8.5 billion in financing provided by J.P. Morgan.
The combined company, which will operate under the name Merck, will be led by Merck Chairman, President, and Chief Executive Officer Richard Clark, and will have its corporate headquarters in Whitehouse Station, NJ. Because the merger will create a much larger organization, Merck expects that the substantial majority of Schering-Plough employees will remain with the combined company.
Dr. Peter Kim, Merck executive vice president and president of Merck Research Laboratories, stated that "Schering-Plough's considerable biologics expertise will complement Merck's novel proprietary biologics platform and aligns with our commitment to build a powerful biologics presence," adding that the pipelines of the two companies, when combined, would be "the best in the industry, by far." For example, by merging with Schering-Plough, Merck will double the number of potential medicines it has in Phase III development, bringing the combined company's total to eighteen. As a result of the merger, Merck also expects to achieve cost savings of approximately $3.5 billion annually beyond 2011.
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