Per the Peter Loftus, at The Wall Street Journal:
. . . .Drug maker Merck & Co. said it has withdrawn its initial filing for U.S. antitrust clearance for its proposed $41 billion purchase of Schering-Plough Corp. but plans to refile with additional information as soon as possible. . . . [A company spokesman] declined to specify the additional information Merck will provide or what led to the withdrawal of the initial filing. . . .
Merck decided to withdraw the filing Monday and will refile soon, which will trigger another 30-day waiting period. . . .
"We believe the refiling for us will provide a productive review process," said [the company spokesman]. "Other parties have taken similar actions in past transactions. We decided to refile as part of our efforts to cooperate with the FTC in their review of the transaction". . . .
This is a common tactical maneuver -- in larger transactions -- to minimize the size, and scope, of the FTC's often-inevitable "second request". [Pfizer received an H-S-R "second request" on the Wyeth deal, for example.] After the initial filing (and after a few consensual waivers of the expiration of the 30 day waiting periods), often the FTC will make a formal request -- a "second request" -- asking for additional information on specific overlapping markets and products.
Merck may very well have gleaned, in its conversations with FTC staffers, where the FTC's deepest antitrust concerns reside. In a pre-emptive move, then, Merck lawyers may have withdrawn the application, temporarily, only to refile it, in a few weeks, with additional details about the markets and products upon which the FTC is focusing most intently.
In any event, this does make a year-end 2009 closing date look less likely -- as I've said, repeatedly, for months now. Moreover, it marginally increases the odds that Merck and Schering-Plough will have to agree to bust-up, and sell-off, more of the to-be-combined company -- to get the deal done.
4 comments:
They must be close to selling their AH unit to Novartis, Lilly or Bayer. Originally Bayer wanted Intervet from Organon and were shocked by the last minute Fast Freddie move by S-P in 2007.
I have no reason to doubt your take -- and it would make sense to be able to recite, in an amended Hart-Scott filing, the particulars of that divestiture, in order to address what must have been FTC staff concerns. This is especially true, faced with what must be the newly-emerging Obama Administration views of what sorts of overlaps will be permitted to clear Hart-Scott review, going forward.
It is also interesting, that -- on the Pfizer/Wyeth deal -- despite having announced the deal in January 2009, Pfizer just filed its first Hart-Scott notice on the deal May 5, 2009. That sort of a timeline, in a same industry, similarly-sized transaction, would place Merck's renewed filing, at the latter part of June 2009 -- with any HSR clearance arriving much, much later in the year. The FTC may even require that the Animal Health businesses divestiture be completed, and closed, before formally clearing the deal.
Thanks for your keen observations!
Namaste
I think you're wrong about Pfizer-Wyeth. Pfizer got a second request from FTC on April 3, which means their first HSR filing would have been in late February or early March. I agree on the animal health comment, and my money's on Lilly or Bayer. Novartis may still have more overlaps than Merck wants to deal with. Lilly (Elanco) and Bayer Animal Health are cleaner deals.
You are absolutely right -- I went back, and looked -- I had written down my research notes on PFE-WYE over a week ago, and scribbled down "Ma[xx] 5 2009" -- meaning "March"; but when I went back to read my own scribbling, I transcribed it, at the keyboard, as "May" not "March", last night.
Quite so. Great points; and I still think Merck will get a rather large second request -- but Merck may be able to limit it, if, as you and I suspect, they are close to a deal on the Animal Health piece.
Thanks for your comments, and corrections! Do stop back.
I'm about to put a new one up -- on merger arbitragers. . . . and hedge fund short sellers.
Namaste
Post a Comment