The Acquisition Between Merck and Schering-Plough
The Acquisition between Merck and Schering-Plough
Introduction
On March 9, 2009, Merck & Co., Inc. and Schering-Plough Corporation announced that their Boards of Directors have unanimously approved a definitive merger agreement under which Merck and Schering-Plough will combine, under the name Merck in a stock and cash transaction. As the two companies' combined 2008 revenues were $47 billion. The deal officially closed on November 3, 2009.
Background of the two parties
Merck & Co. (NYSE: MRK) was initially formed in 1891 as a United States subsidiary of the German chemicals and pharmaceutical company Merck KGaA. During World War I, it was established as an independent company from confiscated assets. Since then, it has grown to become one of the top seven largest pharmaceutical and biotech companies worldwide.
Schering-Plough (NYSE: SGP) is one of the medium-sized players in the pharmaceutical industry, with sales of $18.5 billion in 2008. Its two largest products are autoimmune medication Remicade, sold internationally, and Zetia & Vytorin, a joint venture taken with Merck that fights cholesterol. While growth of Remicade has been strong, Vytorin has taken a hit after studies questioned its efficacy compared to the older drug it is based on and in treating blockage of the heart valve.
The process of the acquisition
The Merck and Schering-Plough took the typical reverse merger arrangement during the acquisition process.
The Merck- Schering-Plough merger agreement contemplates a two-step transaction involving Merck, Schering-Plough, and Schering’s two special purpose, subsidiary holding companies, Blue, Inc. and Purple, Inc. In step one of the mergers, Blue will merge into Schering-Plough and each share of Schering-Plough will be converted into the right to receive (i) 0.5767 shares of the surviving Schering-Plough and (ii) $10.50 in cash. In step two of the merger, Purple will merge into Merck and each share of Merck will be converted into
Introduction
On March 9, 2009, Merck & Co., Inc. and Schering-Plough Corporation announced that their Boards of Directors have unanimously approved a definitive merger agreement under which Merck and Schering-Plough will combine, under the name Merck in a stock and cash transaction. As the two companies' combined 2008 revenues were $47 billion. The deal officially closed on November 3, 2009.
Background of the two parties
Merck & Co. (NYSE: MRK) was initially formed in 1891 as a United States subsidiary of the German chemicals and pharmaceutical company Merck KGaA. During World War I, it was established as an independent company from confiscated assets. Since then, it has grown to become one of the top seven largest pharmaceutical and biotech companies worldwide.
Schering-Plough (NYSE: SGP) is one of the medium-sized players in the pharmaceutical industry, with sales of $18.5 billion in 2008. Its two largest products are autoimmune medication Remicade, sold internationally, and Zetia & Vytorin, a joint venture taken with Merck that fights cholesterol. While growth of Remicade has been strong, Vytorin has taken a hit after studies questioned its efficacy compared to the older drug it is based on and in treating blockage of the heart valve.
The process of the acquisition
The Merck and Schering-Plough took the typical reverse merger arrangement during the acquisition process.
The Merck- Schering-Plough merger agreement contemplates a two-step transaction involving Merck, Schering-Plough, and Schering’s two special purpose, subsidiary holding companies, Blue, Inc. and Purple, Inc. In step one of the mergers, Blue will merge into Schering-Plough and each share of Schering-Plough will be converted into the right to receive (i) 0.5767 shares of the surviving Schering-Plough and (ii) $10.50 in cash. In step two of the merger, Purple will merge into Merck and each share of Merck will be converted into