Merck–Schering-Plough Corp Merger

Abstract

During 2009, Merck and Schering-Plough merged to form Merck in a stock and cash deal. The deal was valued at $41.1 billion. Under the terms of the agreement, Schering-Plough shareholders received 0.5767 shares of the newly combined company and $10.50 in cash for each share of Schering-Plough. On merger completion, Merck shareholders owned approximately 68% of the combined company, and Schering-Plough shareholders owned 32% of the company. The aggregate consideration comprised of approximately 44% cash and 56% stock. The transaction was structured as a “reverse merger’ wherein Schering-Plough became the surviving corporation. The deal between Merck and Schering-Plough created the world’s second largest prescription drug maker. The deal united the maker of asthma drug Singulair with the maker of allergy medicine Nasonex. The merger created a strong broad-based global healthcare pharmaceutical company which immensely benefitted from research and development pipeline, portfolio of medicines, and presence in major international markets specifically in high-growth emerging markets. Schering-Plough’s significant biologics expertise complemented Merck’s novel proprietary biologics platform. Through the acquisition, Merck became one of the world’s biggest animal health businesses. Merck was able to penetrate emerging markets through this consolidation. The cumulative returns for Merck during the 251-day period surrounding the merger window event (−5 to +245 day) period was 48.57%.