Tuesday, March 22, 2011

"Monopoly Powers" -- At 30% Of World Market -- Fell Proposed Merck/Sanofi Vet Med Deal

Last week, when Lilly announced that it would buy some J&J Animal Health assets, I suspected that the Merial deal was in trouble (as Lilly was thought to be one of the buyers for some of the to be divested Merck Animal Health assets) -- and I said so.

I just underestimated how much trouble it ws in. [This is also rather embarrassing for Morgan Stanley, the bank retained to sell off the perhaps $1 billion to $2 billion of Merck/Sanofi offending assets -- they simply couldn't execute the transaction -- couldn't get the deals done.]

When one undertakes to control about a third of the world's veterinary medicines business, one simply begs the anti-trust regulators to step in. And it seems the DoJ/FTC and ECC, among others, did.

Here's a bit of the Whitehouse Station presser, of this morning:

. . . .Since the initial announcement about the intended combination on March 9, 2010, both companies have worked diligently to create the proposed animal health joint venture, including submitting requests for the required antitrust reviews. The companies are discontinuing their agreement primarily because of the increasing complexity of implementing the proposed transaction, both in terms of the nature and extent of the anticipated divestitures and the length of time necessary for the worldwide regulatory review process. Merck and sanofi-aventis mutually determined that ending their plan is in the best interests of both companies and their respective shareholders, as well as the employees of Merial and Intervet/Schering Plough. . . .

Merck's Intervet/Schering-Plough is a global leader in the research, development, manufacturing and sale of veterinary medicines and generated sales of US $ 2.9 billion in 2010. Merck remains firmly committed to animal health and intends to capitalize on Intervet/Schering-Plough's broad and innovative portfolio going forward.

As a result of termination, both Merial and Intervet/Schering-Plough will continue to operate independently. The termination of the agreement is without penalty to either party and each party is responsible for its own expenses. . . .

Well, it isn't like I didn't warn that this would be a real problem, back in November of 2009, and then again in March of 2010 -- when Sanofi exercised its option.

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