Merck To Acquire Schering-Plough In $41.1 Billion Deal
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. Each Merck share will automatically become a share of the combined company. Merck chairman, president and CEO Richard T. Clark will lead the combined company.
Based on the closing price of Merck stock on March 6, the consideration to be received by Schering-Plough shareholders is valued at $23.61 per share, or $41.1 billion in the aggregate.
The price represents a premium to Schering-Plough shareholders of approximately 34 percent based on the closing price of Schering-Plough stock on March 6. The consideration also represents a premium of around 44 percent based on the average closing price of the two stocks over the last 30 trading days.
Upon closing of the transaction, Merck shareholders are expected to own around 68 percent of the combined company, and Schering-Plough shareholders are expected to own around 32 percent. Merck said that the transaction should be modestly accretive to non-GAAP EPS1 in the first full year following completion and significantly accretive thereafter.
Merck said that the combined company will have "a more diverse portfolio across important therapeutic areas, including cardiovascular, respiratory, oncology, neuroscience, infectious disease, immunology, women's health and other areas."
It said that the combined company will "have a strong balance sheet with a cash and investments balance of approximately $8 billion." Merck added that it believes it will maintain its current credit ratings.
Merck is also looking to achieve cost savings of around $3.5 billion annually beyond 2011. The savings are expected to come from all areas across the combined company and from the full integration of the Merck/Schering-Plough Pharmaceuticals cholesterol joint venture, according to Merck.
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