Merck merges with Schering-Plough

Merck & Co., Inc., a pharmaceutical company, has merged with and Schering-Plough Corporation, a healthcare company. Both the companies are based in the US.

Update on October 29, 2009:

Merck and Schering-Plough have received approvals from the US Federal Trade Commission, the Swiss Competition Commission and the Canadian Competition Bureau for their proposed merger.

Update on October 23, 2009:

The European Union has approved the proposed merger between Merck and Schering-Plough.

Update on October 14, 2009:

The Australian Competition and Consumer Commission has approved the proposed merger between Merck and Schering-Plough.

Update on August 7, 2009:

The shareholders of Merck have approved the company's proposed merger with Schering-Plough.

The transaction is expected to close in the fourth quarter of 2009.

Announcement (March 9, 2009):

Merck has entered into a definitive merger agreement with Schering-Plough. According to the agreement, Merck and Schering-Plough would combine, under the name Merck, in a reverse merger transaction valued at approximately $41,100 million payable in cash and stock.

Under the terms of the agreement, Schering-Plough shareholders would receive 0.5767 shares and $10.5 in cash for each share of Schering-Plough. Based on the closing price of Merck stock on March 6, 2009, the consideration to be received by Schering-Plough shareholders is valued at $23.61 per share. The offer price represents a 34% premium to the closing price of Schering-Plough shares on March 6, 2008 and a premium of approximately 44% based on the average closing price of the two stocks over the last 30 trading days.

Following the completion, Schering-Plough Corporation would be the surviving entity, renamed as Merck. The aggregate consideration will be comprised of a combination of approximately 44% cash and 56% stock.

The cash portion will be financed with a combination of $9,800 million from existing cash balances and $8,500 million from committed financing to be provided by J.P. Morgan.

Upon completion, Merck shareholders are expected to own approximately 68% of the combined company, and Schering-Plough shareholders are expected to own approximately 32%.

The Board of Directors of both the companies have approved the transaction. The transaction is expected to close in the fourth quarter of 2009.

J.P. Morgan is acting as financial advisor and Fried, Frank, Harris, Shriver & Jacobson LLP and Covington & Burling are acting as legal advisor to Merck. Goldman, Sachs & Co. and Morgan Stanley are acting as financial advisors, while Wachtell, Lipton, Rosen & Katz LLP and Skadden, Arps, Slate, Meagher & Flom LLP are acting as legal advisors to Schering-Plough.

Deal Value (US$ Million) 41100
Deal Type                Merger
Deal Status              Completed: 2009-11-03

Deal Participants

Target 1 (Company) Merck & Co., Inc.
Target 2 (Company) Schering-Plough Corporation

Deal Rationale

The merger is likely to create enhanced value for the new entity as the companies offer complementary product portfolios and pipelines. It would also considerably increase manufacturing capabilities of the combined organization by adding more capacity to support anticipated growth in biologics and sterile medicines. The combined company would be able to offer a broader product portfolio in critical therapeutic areas and enjoy an expanded global presence, especially in high-growth emerging markets. The merger is also expected to increase efficiencies and result in cost savings.

Bid Premium ($ per share) 34

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