Sunday, June 7, 2009

How The So-Called "Reverse Merger" Gathered Steam -- To Become a Self-Inflicted "Bust-Up". . . .

I have read, with great puzzlement, several (mostly-blogged) accountings of Schering-Plough's proposed reverse merger with Merck. These accountings laud the "premium" being received by Schering-Plough shareholders, and attribute most of Schering-Plough's stock price declines during 2008 and early 2009, to the general economic market melt-down.

Facts, however, are stubborn things. In fact, most of Schering-Plough's decline preceded the meltdown by almost ten full months (click it to view full-size):

Three words: ENHANCE. Results. Delayed.

That is the singular cause of SGP's weakened position. The above-chart proves it -- 1,000 words-worth. SGP common stock has not returned to pre-ENHANCE NYSE trading-levels, even post the occasionally vaunted "reverse merger" proposal from Merck.

Moreover, in fact, most of the multi-national concerns -- in the larger pharmaceutical sector -- fared well (relatively-speaking) during the markets' melt-down -- toward the end of 2008, and into early 2009. No, CEO Hassan, and the rest of his Top Five EMT officers are almost singularly responsible for the events that actually crippled Schering-Plough, and left it with essentially no options, other than a deal on Merck's terms, or a deal on Johnson & Johnson's terms.

In the end, as we now know from Schering's own SEC filings, J&J's CEO William Weldon wholly-declined to make any firm offer -- at any price. So CEO Hassan was left to negotiate -- with Merck CEO Dick Clark, knowing full-well that there was no serious competition for Schering-Plough's assets.

And thus, the bust-up -- styled as a reverse merger -- was born. So don't "get it twisted", here, folks -- lest there be any doubt, consider that the Vytorin/Zetia swoon continues unabated, despite CEO Hassan's contrary assurances:

Yep -- Facts are stubborn things.

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