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news.Merck & Co and Schering-Plough have signed a definitive merger agreement under which Merck and Schering-Plough will combine, under the name Merck, in a stock and cash transaction. 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, or $41.1 billion in the aggregate.
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Under the terms of the agreement, Schering-Plough shareholders will receive 0.5767 shares and $10.50 in cash for each share of Schering-Plough. Each Merck share will automatically become a share of the combined company. Richard Clark, Merck’s chairman, president and CEO will lead the combined company.
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 $9.8 billion from existing cash balances and $8.5 billion from committed financing to be provided by JP Morgan.
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%. The transaction will double the number of potential medicines Merck has in Phase III development, bringing the total to 18.
Following the close of the transaction, the board of directors of the combined company will be comprised of the Merck board and three representatives from Schering-Plough’s board.
Merck expects that the substantial majority of Schering-Plough employees will remain with the combined company. In addition, both Merck and Schering-Plough will institute hiring freezes immediately. The combined company will have its corporate headquarters in Whitehouse Station, New Jersey.
Mr Clark said: “We look forward to joining forces with an outstanding partner we know well and that shares our commitment to patients, employees and the communities where we work and live. Through their talent and dedication, Schering-Plough employees have built an industry leading R&D engine and late-stage pipeline that is complementary to our own. We are confident that, together, Merck and Schering-Plough will make a meaningful difference in the future of global healthcare.”