10 Mar 2009

Drug firms in $US41 billion merger

7:14 am on 10 March 2009

Merck is to buy Schering-Plough in a $US41.1 billion deal, creating one of the world's biggest drug companies.

The BBC reports the merger unites the makers of cholesterol drugs Zetia and Vytorin at a time of falling sales.

Shareholders in Schering Plough will get $US10.50 in cash, and just over half of one Merck share, for each share in Schering-Plough that they own.

The deal follows Pfizer's $US68 billion takeover of Wyeth, which was announced in January.

Shares in Schering-Plough rose 18.4% to $20.88 in early trade, while Merck shares fell 3% to $22.06.

A statement said the two companies had a combined $US47 billion in revenues in 2008, and the merger should result in $US3.5 billion of cost savings annually beyond 2011.

Both Merck and Schering-Plough - which also makes Dr Scholl foot products and the Coppertone suntan line - announced big job cuts last year. It is unclear if the merger will lead to more redundancies.

Vytorin and Zetia between them are worth $US4.5 billion in annual sales, which are stabilising after a period of decline.

At the same time as it announced the deal, Merck reaffirmed its expectations for full-year 2009 revenues to be in the range of $US23.7 billion - $US24.2 billion.