Recall that in July 2009 Merck announced it would tansfer its half-share of the Merial businesses back to Sanofi, in order to close the bust-up. Recall also that on March 9, 2010, Merck and Sanofi announced that the legacy Schering-Plough Intervet businesses would now to be contributed to Merial, in mid-2011, assuming all appropriate antitrust clearances.
Okay -- and here it gets fuzzy, but I suspect that in the meantime, Merck will begin reporting legacy Schering-Plough Intervet Animal Health as an unconsolidated operation. Merck may report half of it effectively held for sale, to Sanofi's Merial -- and thus only include the other half of its results in Merck's operating results, proper. Got all that? [Me either, truth be told.] In short, we'll see. My GAAP is probably rusty, here.
We'll have certainty on next Tuesday morning, pre-NYSE open, when New Merck reports its first quarter 2010 results -- and the legacy Schering-Plough Intervet businesses with it -- but here is what Sanofi-Aventis just reported this morning, on these Merial businesses:
. . . .Merial, which has been a wholly-owned subsidiary of sanofi-aventis since September 18, 2009, recorded first-quarter net sales of $724 million, up 0.5% (+5.8% on a reported basis). Net sales of the companion animal franchise were slightly down (-1.1%), reflecting a late parasiticide season and new entrants. The production animals segment reported a good performance with a 4.9% sales increase (to $214 million), driven by Avian sales (+10.4%) and Veterinary Public Health sales (+34.0%), boosted by favorable sales of blue-tongue virus vaccines. These performances were slightly offset by lower sales (-2.7%) for the Ruminant franchise, impacted by depressed milk prices in Europe. . . .
Could presage some pressure on New Merck results, in the companion animals, and production animal ruminant segments. We'll see.