RAHWAY – In a deal announced Monday, Merck & Co. is buying Schering-Plough Corp. for $41.1 billion in stock and cash. The deal unites the two New Jersey pharmaceutical companies as the industry faces slumping sales, tough generic competition and increasing cost pressures.
Schering-Plough stockholders will get $10.50 in cash and 0.5767 Merck shares for each share of Schering-Plough stock they own. The price represents a 34 percent premium over Schering-Plough’s closing price on Friday.
Merck’s Chairman and CEO Richard Clark will lead the combined company, which should be a dominant player in treatment areas including cholesterol, respiratory, infectious disease and women’s drugs, as well as vaccines.
There will be “no immediate changes” to staffing levels, according to Merck spokeswoman Amy Rose. “Eventually, we anticipate an approximate 15 percent reduction in the combined company’s headcount,” she said.
The combined company will stay at Merck’s headquarters in Whitehouse Station, but the “substantial majority” of employees of Kenilworth-based Schering-Plough are expected to remain with the firm.
Schering-Plough CEO Fred Hassan will participate in planning the integration of the two companies until the close of the deal, which is expected in the fourth quarter.
The two companies had a combined $47 billion in revenue in 2008.
Merck’s sales were down 3 percent in the fourth quarter, at $6 billion, while Schering-Plough’s were up 17 percent to $4.35 billion.
The companies said this will improve their finances, giving them annual cost savings of about $3.5 billion each year after 2011, and will boost earnings per share in the first full year after the deal closes.