Odd Story -- Out of San Francisco -- Of A Suit To Block Pfizer's Merger

Apparently, this suit must have been filed fairly late in the day on Friday, as it has yet to show up on the electronic dockets of the US District Court, for the Northern District of California (seems to be a Pfizer/Wyeth festival weekend here!). And so, I haven't analyzed the filings yet, but Bloomberg is reporting that several pharmacies, and a few individuals have sued to block the Pfizer-Wyeth combination, alleging that Pfizer's financiers, JP Morgan Chase, primarily -- accepted TARP/TALF funds.

If that seems a stretch, as a reason to block the merger -- at first blush, I agree.

That is why I'd like to see the federal civil complaint, proper. It should be available Monday. In any event, the theory, at least as explained by Bloomberg's reporters, is that TALF/TARP money cannot be used to reduce competition, and eliminate jobs (the 22,000 people reputed to be severed in that transaction). It would seem that such policing would grind the wheels of commerce to a halt -- if all TALF/TARP money must be traced to where it has been lent, or otherwise put to work, before a transaction involving job losses may close.

As I say, seems dubious, but here's the snippet:

. . . .The acquisition will eliminate competition for certain drugs, lead to fewer supplier choices for pharmacies, push up prices for medicines and result in 22,000 job cuts, according to a complaint filed yesterday in federal court in San Francisco.

Four of the five banks providing $22.5 billion in loans to finance the buyout have received Troubled Asset Relief Program funds, the pharmacies say. Government bailout money shouldn’t be used to finance job losses, according to the complaint. . . .

Merck's lead financier was -- you guessed it -- JP Morgan Chase. Again, I am not convinced, yet, that there is much meat on these bones -- but if there is, it would seem to apply with equal or greater force, to Merck's proposed transaction with Schering-Plough, a transaction in which at least 16,000 jobs are expected to be eliminated.

I'll keep you posted.