Merck to Buy Schering-Plough for $41 Billion

[godoftrading]

March 9 (Bloomberg) -- Merck & Co. agreed to buy rival U.S. drugmaker Schering-Plough Corp. for $41.1 billion in cash and stock to get a larger experimental pipeline and products unhindered by imminent patent losses.

Schering-Plough holders will get $23.61 a share, a 34 percent premium to the closing stock price last week, the companies said in a Business Wire statement. Shares of Kenilworth, New Jersey-based Schering-Plough rose the most in a month in New York trading on March 6 on speculation of a bid from Merck or Johnson & Johnson.

“It clearly is a year of mergers for pharmaceutical companies,” said Philippe Lanone, an analyst at Natixis Securities in Paris, in a telephone interview. “They don’t have much of a choice if they are to guarantee EPS growth in the years to come.”

Schering-Plough has medicines in late-stage testing that may generate more than $6 billion in annual sales, the company said at a November analyst meeting. Last month, Schering-Plough’s earnings beat analyst estimates after the drugmaker added sales from its acquisition of Organon BioSciences and reduced costs.

Under the terms of the deal, Schering-Plough shareholders will receive 0.5767 shares and $10.50 in cash for each share of Schering-Plough. 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 JPMorgan Chase & Co.

Merger Monday

[BigE]

Saw this on TV yesterday. Too bad it didn't have that big of an effect on the markets, which dropped anyway...