Sunday Morning Rumors -- In Comments -- Related To The Lower Than Expected Selling Price For Consumer Health?

It is a lazy Sunday morning, so as I sip my coffee. . . I'll let my imagination wander, and muse, about potentially. . . connected events. Emphasis: potentially.

First -- this is a rumor only -- and I have some smallish reasons to be. . . skeptical. [So his name will not appear in the post.] After all, the gentleman suggested in comments as having departed along with Mr. Kellogg is a Section 16 reporting officer of Merck, under applicable SEC rules. That could mean, under at least some readings of the SEC Form 8-K instructions -- that he should have been named, along with Mr. Kellogg, as departing -- if the two were departing as a part of a single plan. The contra argument is the better one though -- it runs that he is not a "principal" officer in any sense (Under Form 8-K, Instructions for Section 5.02(b)); nor is he in charge of reporting or finance, overall. He is listed as being in charge of the Merck Global Innovation Fund, an investing arm. On balance, then, I am comfortable saying his departure need not be disclosed immediately under the SEC Form 8-K rules. So, I now have reason to believe my anonymous commenter's veracity here.

The commenter below reports overnight that the EVP and Chief Strategy Officer is also leaving Merck, with no immediate next job lined up. If that turns out to be true, it occurs to me that each of the three most recently departing executives may have predicted to the board that the Consumer Health businesses might fetch more than $10 billion -- if sold. And by my lights, the actual bids are likely going to be more than 30 per cent below that figure.

Almost certainly, by late last week, Merck knew whether any such bid was potentially going to be north of $7 billion. As I speculated just yesterday, if so, that would likely be a European or UK buyer, as the dollar demoninated Consumer Health sales here, would translate into a higher currency figure, "over there" when repatriated, or simply consolidated up, and reported under a non-US home office company. That might justify a higher price.

In any event, overall, if these executives expected $10 to $12 billion, and are only getting a little shy of $7 billion, Merck may (embarrassingly) announce that it is abandoning the sale idea, and will be looking at other options -- like a split or spin -- direct to existing Merck shareholders. [And, fascinatingly, incoming CFO Rob Davis has deep experience in such transactions, at Baxter and Lilly.]

Again, all of that is idle conjecture, on a Sunday morning. Take it as such. We will of course wait and see.

But I'd not expect any immediate announcement next week -- unless Merck has found a patsy willing to pay more than $10 billion. And I now very much doubt that. But I'd LOVE to be proven wrong here. Be excellent to one another! [And "Go Florida!" -- keep my NCAA bracket chances alive. . . . Neither Mr. Obama or I had Wisconsin to get by Arizona. Hmmm.]