The online version of London's Financial Times had, back in late March of 2009, also run a "rumors" piece that very accurately presaged Johnson & Johnson's filing for arbitration (re Remicade and Simponi non-US rights reversion) -- so I'd tend to give this piece just a little more credence than it might otherwise be entitled, simply on its face.
What was most intriguing to me was the relative prominence that FT's stringer Andrew Jack, in London, allocated to the divestiture of all the Animal Health businesses (as I have, before) -- even in the face of still-operative comments to the contrary from Merck CEO Dick Clark. From Financial Times, then [UPDATED version of this story here]:
. . . .Merck. . . is close to restructuring its lucrative animal medicines assets in a wide-ranging deal likely to be finalised in the next few weeks with its partner Sanofi-Aventis that could earn it more than
$4$10 billion. . . .
Merck is considering whether to fold Schering-Plough’s animal health division into Merial in exchange for a fresh balancing cash injection from Sanofi-Aventis, to sell them to a third party, or to sell its own stake in Merial. . . .
Merial, established as a joint venture in 1997, generated sales last year of $2.8 billion.
Schering-Plough’s own animal health products and those of Intervet, which it acquired from Akzo Nobel in 2007, generated [revenues of] nearly $3 billion last year.
Chris Viehbacher, the head of Sanofi-Aventis appointed at the end of last year, has expressed his interest in diversifying the business away from core pharmaceutical products and stressed a large capacity to fund deals, suggesting an appetite to strengthen the French group’s position in animal health. . . .
That last bit might imply that Sanofi, alone, or with other backing, would buy the whole of all the Animal Health franchises, outright -- then carve them up, in some fashion. If sold, the aggregated Animal Health franchises would greatly reduce New Merck's (and to be clear -- "New Merck" is a far more accurate descriptor for the Sch-Merck entity, than any name which would include the old "Schering-Plough" handle -- so I'll likely use "New Merck" to refer to the post-merged entity, from now on) debt load, post reverse-merger. They could be nearly completely-delevered, when compared to pre-merger levels.
In this market, that would allow New Merck to weather significant internal (i.e., FDA non-approvals and patent-cliffs), or external (i.e., reform-driven pricing pressures and/or any future overall-market calamaties and) challenges.