The generally excellent, and ever provocative In Vivo blog has nominated the Merck-Schering-Plough "Bust-Up, Styled As A Reverse Merger" transaction for its Roger® award -- the pharma deal of the year 2009. In doing so, it explains that the deal is not as transformative as Pfizer's purchase of Wyeth, and likely only buys some moderate extension of time for Merck, on its patent-cliff -- and finally, that 40 percent of the deal's synergy value will likely come from layoffs and plant closings. And still the editors picked it, as a nominee. Uh-huh.
What In Vivo calls "crafty", I would call borderline sham-transactional ledger-domain -- but that will be for a panel of arbitrators to ultimately decide, if Schering/Merck shot itself in the foot, to the tune of $8 billion in annual revenue (via openly picking the J&J Remicade/Simponi fight, rather than negotiating a settled distribution deal ex-US, in advance of the big deal's announcement), thus:
. . . .The second clever bit was the deal's structure, designed to minimize the chance that Johnson & Johnson comes in to spoil the party. Per the companies' 1998 agreement granting Schering ex-US rights to anti-TNF drugs Remicade (and follow-on Simponi), J&J has a change of control clause allowing it to scoop back those rights in the event that Schering-Plough is taken over. (The two drugs in question are potentially worth up to $8 billion together.)
But technically Schering-Plough isn't being taken over: the deal is a reverse-merger in which Schering is the surviving entity--renamed as Merck. And run by Merck's CEO Dick Clark out of Whitehouse Station, N.J.. . . .
Now okay, J&J has sought arbitration. So that crafty bit may not work out. . . .
Do go read it all -- to my eye, it is sorta' like the bespectacled nerdy kid in the front of the class, admiring the unruly kid in the back, who is forever stealing, via-strong-arm tactics, the others' lunch money. I guess we'll have to wait and see whether the arbitrators force the unruly kid to pay some, or all of that lunch-money back (some $8 billion, annually).
Odd.
[H/T Anonymous, in comments, below -- for the lead.]
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