Schering Stockholders Approve Merger
Schering-Plough approved the planned merger of the two U.S. drugmakers Merck and Schering-Plough. The deal remains on track to close in the fourth quarter. The companies said more than 99% of votes cast by their respective stockholders endorsed the deal. The transaction, whose value was pegged at $41 billion when it was announced in March, still requires approval by U.S. and European regulators. The merger pact, which followed a long-standing joint venture between Merck and Schering-Plough that sells the cholesterol fighters Vytorin and Zetia, was announced only weeks after Pfizer's $68 billion planned purchase of Wyeth. That deal is also slated to close this year. Earnings of Merck and Schering-Plough have deteriorated over the past 18 months due to a plunge in sales of Vytorin and Zetia, sparked by a pair of clinical studies that undermined the perceived effectiveness of the medicines. Merck hopes its profit outlook will improve due to cost cuts from the merger with its smaller U.S. rival and a number of promising Schering-Plough products working their way through clinical trials. Merck has said about 15% of their combined workforce would be eliminated under the deal, with most job cuts to take place outside the U.S. It would leave an estimated 90,000 jobs on Merck's payroll. To pave the way for the merger, Merck agreed to sell its 50% stake in Merial, an animal health business that specializes in pet care, for $4 billion to long-standing partner Sanofi-Aventis. The move was designed to allay potential antitrust concerns, given that Schering-Plough also has a thriving animal health business called Intervet, which has a big focus on livestock.
