Drug Deal

New York, March 9: Merck, the American pharmaceutical giant, will pay $41 billion to acquire smaller rival Schering-Plough.

The companies said in a joint statement that the merged company would keep the name Merck, and that the deal had been unanimously approved by their boards. Richard T. Clark, Merck’s chairman and CEO, will lead the new entity.

With the latest acquisition, Merck will expand its franchise in cardiovascular, respiratory and oncology drugs, and shore up its research pipeline. It will also benefit from the worldwide reach of Schering-Plough, which generates about 70 per cent of its sales outside the United States, including more than $2 billion in a year from emerging markets.

The deal marks the second major pharmaceutical deal this year. In January, Pfizer had bid $68 billion for Wyeth. Roche, the Swiss pharmaceutical company, is pursuing a full acquisition of biotechnology company Genetech, in which it already owns a majority stake.

Shares of Schering-Plough rose more than 8 per cent on Friday amid speculation that the company was being pursued by either Johnson & Johnson or Merck. Under the terms of the deal, Schering-Plough shareholders will receive 0.5767 shares of Merck and $10.50 in cash for each share of Schering-Plough.

Each Merck share will automatically become a share of the combined company. Based on Merck’s closing stock price on Friday, the deal values Schering-Plough at $23.61 a share, or $41.1 billion, a premium of about 34 per cent based on the closing price of Schering-Plough.

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