Merck to Buy Schering-Plough for $41.1 Billion - NYTimes.com: "Merck, the American pharmaceutical giant, will pay $41 billion to acquire a rival Schering-Plough, the two companies said Monday."
Teaching points:
Takeovers must be approved by the boards. (Of course sometimes we must elect a new board to get this accomplished)\
"...the deal had been unanimously approved by their boards."Where is the synergy coming from?
"With the move, Merck is expanding its franchise in cardiovascular, respiratory and oncology drugs and shoring up its research pipeline, which includes a noted Schering-Plough product called TRA, a promising drug designed to prevent blood clotting. In addition, Merck will benefit from the worldwide reach of Schering-Plough...."That one deal often triggers other deals:
"The deal marks the second major pharmaceutical deal this year. In January, Pfizer, the world’s biggest drug maker, bid $68 billion bid for Wyeth. And Roche, the Swiss pharmaceutical company, is pursuing a full acquisition of the biotechnology company Genentech, in which it already owns a majority stake."How the deal will be structured and financed:
"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 become a share of the combined company. The deal values Schering-Plough at $23.61 a share, or $41.1 billion, a premium of about 34 percent based on Friday’s closing price for Schering-Plough.The 44 percent of the deal that is being paid in cash will be financed with a combination of $9.8 billion from existing cash balances and $8.5 billion from financing....The transaction will be structured as a “reverse merger” in which Schering-Plough, renamed Merck, will continue as the surviving public corporation."Definitely will be covered in class! Stay tuned.
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