Merck, Schering-Plough Shareholders Approve Merger
August 07 2009 - 2:34PM
Dow Jones News
Shareholders of Merck & Co. (MRK) and Schering-Plough Corp.
(SGP) voted Friday in favor of the drug makers' merger, hitting a
milestone on the way to the deal's expected closing later this
year.
Merck shares rose $1.11, or nearly 4%, to $30.49; Schering
shares rose 79 cents, or 3%, to $26.83.
More than 99% of the votes cast by each company's shareholders
were in favor of what amounts to a Merck takeover of
Schering-Plough in a cash-and-stock deal valued at $41 billion when
it was announced in March. Merck's special shareholder meeting was
in Bridgewater, N.J., while Schering's was in Boston.
The merger is still subject to antitrust clearance. Merck likely
resolved regulatory concerns about the companies' overlapping
animal-health assets with last week's agreement to sell its 50%
stake in the Merial animal-health joint venture to partner
Sanofi-Aventis SA (SNY) for $4 billion.
Merck, which has been beset by patent expirations and research
setbacks, is gaining access to a relatively strong research
pipeline through the Schering deal. Schering shareholders were
lured by the deal's 34% premium to the stock price shortly before
the deal was announced.
Merck and Schering structured their deal as a reverse merger, in
which Schering will be the surviving corporation but will have
Merck's name and be controlled by Merck's board and top management.
The structure is designed to ensure that the post-merger Merck
retains marketing rights to arthritis drugs including Remicade.
Schering co-markets the drugs with Johnson & Johnson (JNJ), but
their agreement has a change-of-control provision under which full
rights to the drugs would revert to J&J if Schering were taken
over.
J&J has claimed the change-of-control clause was triggered
by the Merck-Schering deal. The dispute is headed toward
arbitration, though some analysts believe the parties will
eventually settle the case.
Merck, of Whitehouse Station, N.J., has said the arbitration
process could take awhile and linger even after the Schering deal
closes.
Schering-Plough, of Kenilworth, N.J., said Friday it expects the
combined company to continue the dividend policies of Merck,
currently a quarterly cash dividend of 38 cents per share.
-Peter Loftus; Dow Jones Newswires; 215-656-8289;
peter.loftus@dowjones.com