If Merck's trial lawyers are to be believed, all that happened when Merck busted up Schering-Plough (as of November 3, 2009), was that Schering-Plough "changed its name" to Merck.
That is what the lawyers for Merck -- in Gradone v. Schering-Plough, et al., the ENHANCE ERISA putative class action -- just swore, in an Amended Answer filed yesterday (full 43 page PDF file; 2.3 Mb), to the Amended ERISA breach of fiduciary duties federal would-be class action complaint.
Funny. I just checked -- and Ex-CEO Fred Hassan's employment agreement DOES NOT provide for "Change of Control" payments, in the event of a simple corporate name change. (I just double-checked -- nope, it doesn't). Yet we all know (and New Merck swore to the SEC) that it billowed out nearly $175 million in golden parachute silk to Mr. Hassan, as payout-consideration, under that very same "Change of Control" clause (with Merck now at about $36 a share, on the NYSE).
So -- why on Earth would Merck's lawyers aver such a thing (see image at bottom, centered; click it to enlarge)?
Oh. Right. There is this $4 to $10 billion arbitration pending -- in which it is critical that Merck argue that there was NO "Change of Control" when it busted-up Schering-Plough. That explains the borderline false pleading in Gradone, overnight. It would be hilarious, if it were not so transparently sad. From Merck's own SEC filing, of last week:
. . . .What happens if Centocor prevails in the Arbitration?
. . . .[I]f the arbitrators were to conclude that Centocor is permitted to terminate the Distribution Agreement as a result of the Merger and Centocor in fact terminates the Distribution Agreement, the Company’s subsidiary would not be able to distribute Remicade or Simponi. In addition, in the Arbitration, Centocor is claiming damages, “in an amount to be determined”, that result from Merck’s alleged non-termination of the Distribution Agreement. If Centocor were to prevail in the Arbitration, Merck could be liable for the net damages, excluding any offsets or mitigation, that the Arbitration panel finds Centocor incurred as a result of non-termination and the Company would suffer an impairment charge. An unfavorable outcome in the Arbitration would have a material adverse effect on the Company’s financial position, liquidity and results of operations. . . .
So, finally -- here is the Gradone page (click it!) -- the below highlighted statement is technically true, insofar as it goes. It is just woefully incomplete:
We'll keep you posted on all the goofy New Merck arbitration hi-jinx.