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Merck & Co agrees S-P purchase

Merck & Co has agreed to buy Schering-Plough for $41.4bn in cash and stock in a deal that will see the former gain access to a bulging pipeline and mid life cycle products not under threat of patent expiry

Merck & Co has agreed to buy Schering-Plough (S-P) for $41.4bn in cash and stock in a deal that will see the former gain access to a bulging pipeline and mid life cycle products not under threat of patent expiry.

Under the terms of the deal S-P shareholders will get $23.61 per share, a 34 per cent premium on the company's closing share price in the week ended March 6, 2009. S-P shareholders will receive 0.5767 shares and $10.50 in cash for each share. The cash segment will be financed through a combination of $9.8bn from existing cash balances and $8.5bn from committed financing which will be provided by investment bank JP Morgan Chase & Co.

Merck & Co CEO Richard T Clarke will lead the combined company which, when the deal closes, will be 68 per cent owned by Merck and 32 per cent owned by S-P. The companies currently collaborate on cholesterol-lowering treatments, Vytorin and Zetia.

Late-stage products at S-P are said to be worth some $6bn in annual sales, the company announced at an analysts meeting in November last year. The most promising product in development is TRA, a treatment aimed at preventing blood clots with fewer side effects than existing drugs. S-P has said that the product could reach the market by 2011.

9th March 2009

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