Merck & Co is to acquire Schering-Plough for $41.1 billion in the latest mega-merger to hit the industry in the last few weeks.
Under the terms of the stock-and-cash deal, the consideration to be received by S-P shareholders is valued at $23.61 per share, a premium of around 34% based on its closing price on March 6. Merck stockholders will own 68% of the enlarged group which will be headed by the firm’s chief executive Richard Clark.
Merck and S-P, which already sell the cholesterol-lowering drugs Vytorin (ezetimibe plus simvastatin) and Zetia (ezetimibe) through a joint venture, said that the combined company “will have expanded opportunities for life-cycle management through the introduction of potential new combinations and formulations of existing products”. Also the transaction will double the number of drugs Merck has in Phase III, bringing the total to 18.
It will also diversify the Whitehouse Station, New Jersey-based giant’s portfolio of medicines to include cardiovascular, respiratory, oncology, neuroscience, infectious disease and immunology. Merck said it expects the deal to add modestly to operating earnings in the first full year following completion and significantly after that.
The enlarged group will achieve “substantial cost savings” of about $3.5 billion annually beyond 2011 and its combined 2008 revenues totalled $47 billion. “We are creating a strong, global healthcare leader built for sustainable growth and success,” said Mr Clark, adding that his firm’s presence will be expanded in “key international markets, particularly in high-growth emerging markets”.
His counterpart at S-P, Fred Hassan, said that over the last six years, “we have transformed our company into a strong competitor in the global pharmaceutical industry”. Her added that “we have built a strong, diverse business and a robust pipeline” and joining forces with Merck will create “a dynamic new leader” in the sector.
The Merck/S-P marriage comes after Pfizer’s $68 billion offer to buy Wyeth was announced at the end of January, There will be a conference call later today and PharmaTimes World News will have more on the planned merger tomorrow.
