Merck and Schering-Plough in $41B merger

Drugmaker to keep Merck name, and Merck CEO Clark will take reins.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)
By David Goldman and Aaron Smith, staff writers

NEW YORK ( -- Drugmaker Merck & Co. announced Monday that it has agreed to acquire rival Schering-Plough Corp. in a deal worth $41.1 billion.

The combined company will take the Merck name, and Merck Chief Executive Richard Clark will take the reins.

According to the agreement, Schering-Plough shareholders will receive 0.5767 share of Merck and $10.50 in cash for each Schering-Plough share. Merck stock holders will automatically have their shares converted into shares of the combined company.

Merck Chief Executive Richard Clark said, in a teleconference with reporters and analysts, that the merger "makes great strategic sense." He said the "combined strengths" of the companies will "create sustainable growth and meaningful value for shareholders."

Schering-Plough Chief Executive Fred Hassan called it "the right transaction at the right time." He said the combined pipeline of the two companies allows them "many, many shots at the goal," meaning greater chances of success in getting new drugs onto the market.

The deal is expected to close in the fourth quarter.

Les Funtleyder, pharmaceutical analyst for Miller Tabak, said the Merck-Schering merger puts these companies on par with Pfizer, which merged with Wyeth earlier this year.

Merck and Schering-Plough, with their combined resources, are better able to compete with Pfizer, the largest drugmaker in the world in terms of annual sales, he said.

"I think this helps diversify them," said Funtleyder, noting that the two companies have overlapping portfolios for cardiovascular, respiratory and anti-viral drugs and experimental drugs.

He also said that Schering-Plough will add animal health products and a consumer division to Merck's profile, while bolstering its women's health area, led by Merck's cervical cancer vaccine Gardasil.

The companies already had an agreement with their cholesterol treatment Vytorin, a combination of Schering-Plough's Zetia and Merck's generic drug Zocor. But a study released by the companies in January 2008 showed that the combination drug was no more effective in treating high cholesterol than the relatively low-cost Zocor, when taken alone.

Going forward, Funtleyder said that competing drugmakers Bristol-Myers Squibb and Eli Lilly & Co. might be pressured to merge.

Merck said its 2009 outlook has not changed, and it is committed to keeping its annual dividend at it's current level of $1.52 per share.

Both drugmakers reported better-than-expected quarterly results in early February, but announced steep job cuts. On a conference call with investors on Feb. 3, Clark said the drugmaker was open to a takeover of a large pharmaceutical company.

Monday's announcement was just the latest in a string of recent deals in the pharmaceutical world. Pfizer Inc. (PFE, Fortune 500) announced Jan. 26 that it is buying the smaller Wyeth (WYE, Fortune 500) for $68 billion, and Swiss drugmaker Roche Holding AG continues to pursue a $40 billion hostile bid of Genentech Inc. (DNA).

Shares of Merck (MRK, Fortune 500) fell about 11% and Schering-Plough (SGP, Fortune 500) shares were up about 11% in premarket trading. To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.