FTC Wants More Info on Merck/Schering-Plough Merger
By David Feldman at 22 June, 2009, 11:31 am
According to Crain’s New York Business, the US Federal Trade Commission, looking at the antitrust implications of the proposed $41 billion combination of Merck and Schering-Plough, has asked the companies to supply more information about the transaction. Apparently this was expected, but does mean that the deal will go through greater scrutiny by the federal regulators.
The combination is of interest to us because it is structured as a reverse merger; if closed it would be the biggest reverse merger ever. While it is not a merger involving a shell, Schering will survive the combination even though it is the smaller of the two companies. The parties structured it this way because they believe it will avoid giving Johnson & Johnson the right to terminate certain important licensing arrangements based on a change in control of Schering.
We had previously written about this and reviewed the agreements in question and determined that it is by no means clear that the reverse merger structure will insulate the companies from losing J&J. We will keep an eye on this biggest deal ever.
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