Merck, Schering-Plough to merge in $41.1B deal

Merck & Co. agreed to buy rival U.S. drugmaker Schering-Plough Corp. for $41.1 billion in cash and stock to get a larger experimental pipeline and products unhindered by imminent patent losses.

Schering-Plough holders will get $23.61 a share, a 34 percent premium to the closing stock price last week, the companies said in a Business Wire statement. Shares of Kenilworth, New Jersey-based Schering-Plough rose the most in a month in New York trading on March 6 on speculation of a bid from Merck or Johnson & Johnson.

“It clearly is a year of mergers for pharmaceutical companies,” said Philippe Lanone, an analyst at Natixis Securities in Paris, in a telephone interview. “They don’t have much of a choice if they are to guarantee EPS growth in the years to come.”

An intense DOJ review is expected.  Fried, Frank, Harris, Shriver & Jacobson LLP acted as legal advisor to Merck.  Wachtell, Lipton, Rosen & Katz acted as legal advisor to Schering-Plough.

For the full press release which details the transaction click here.

The deal comes on the heels of the New York State and Congressional investigations of Merck and Schering-Plough over Vytorin, a high cholesterol medication, in which the companies are accused of hiding test results on the drug.  For details click here and click here.