Merck announced, a little over an hour ago, that it had signed an agreement with Schering-Plough’s board of directors to merge the two companies under the Merck name.
The stock and cash transaction is worth over $41 billion with Schering shareholders receiving $10.50 per share in cash and 0.5767 of a share of the combined companyâ€”a 34 percent premium over Friday’s closing price. Merck Chairman Richard T. Clark will assume control of the joint company. Schering CEO Fred Hassan will continue to manage the company until the end of the merger period. He had this to say in a release this morning.
“We are joining forces with Merck, our long-term partner in our cholesterol joint venture, to create a dynamic new leader in the pharmaceutical industry,” Hassan stated.
No word yet on what this means for the future of the employees, but as with the Pfizer/Wyeth mergers, cuts of redundant positions are expected.
“A key priority is keeping the best talent from both companies,” Merck stated in a release. “Recognizing that the combination will result in a much larger organization, Merck expects that the substantial majority of Schering-Plough employees will remain with the combined company.Â In addition, both Merck and Schering-Plough will institute hiring freezes immediately.”
Schering and Merck have been strategic partners for years, with a collaberation on the blockbuster cholesterol drug Vytorin. The two companies came under fire last year after a study revealed that the drug was no better than its generic equivalent at lowering arterial plaqueâ€”a treatment that it was never approved for. The drug has been a billion dollar seller and has proven to lower total cholesterol levels while raising good cholesterol.
The two companies, also, failed to get an approvable letter, last year, for a combination drug of Claritin and Singulair to treat seasonal allergic rhinitis.
We’ll have more on this story throughout the day.