Merck (MRK) To Acquire Schering-Plough (SGP) In $41 Billion Deal
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Merck & Co., Inc. (NYSE: MRK) and Schering-Plough Corporation (NYSE: SGP) announced a definitive merger agreement under which Merck and Schering-Plough will combine, under the name Merck, in a stock and cash transaction worth $41.1 billion.
Under the terms of the agreement, 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 Chief Executive Officer Richard T. Clark will lead the combined company.
Based on the closing price of Merck stock on March 6, 2009, the consideration to be received by Schering-Plough shareholders is valued at $23.61 per share, a 34% premium based on the closing price of Schering-Plough stock on March 6, 2009.
Merck's Board of Directors is committed to maintaining the dividend at the current level following the closing of the transaction. Merck currently pays an annual dividend of $1.52 per share, which, on an as-converted basis, represents a three fold increase for Schering-Plough shareholders.
Merck expects to achieve substantial cost savings of approximately $3.5 billion annually beyond 2011. The transaction is anticipated to be modestly accretive to non-GAAP EPS(1) in the first full year following completion and significantly accretive thereafter.
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