News last update:6 Aug 2012

Merck buys neighbour Schering-Plough

Merck & Co., Inc. and Schering-Plough Corporation have announced a definitive merger agreement under which the companies Merck and Schering-Plough will combine, under the name Merck, in a stock and cash transaction.

The drug manufacturing industry continues to show signs of weakness as more of the major players team up in partnerships, creating dramatic cost-cutting measures and possibly stunting scientific exploration.
Consolidation in the drug industry is in full swing now that Pfizer has teamed up with Wyeth and Merck is buying New Jersey-based neighbor Schering-Plough. The part-cash, part-stock deal values Schering at $47.5 billion, including its $7.9 billion in debt.
Yet investors seem less than enthused by the prospect of an even larger drug machine - one that arguably has been producing very little over the last decade, while smaller, more limber companies have been making most of the major scientific inroads.
The deal pleases financial analysts, who believe it should help the company increase earnings and maintain its dividend.
Merck Chairman, President and Chief Executive Officer Richard T. Clark will lead the combined company.
Upon closing of the transaction, Merck shareholders are expected to own approximately 68% of the combined company, and Schering-Plough shareholders are expected to own approximately 32%.
“We are creating a strong, global healthcare leader built for sustainable growth and success,” said Clark.
“We are confident that, together, Merck and Schering-Plough will make a meaningful difference in the future of global healthcare,” Clark added.
Interesting analysis: Why a reverse merger?

Dick Ziggers

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