M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

Saturday, November 14, 2009

Merck Stock Swap Confusion

As you'll remember, Merck structured its recent acquisition of Schering-Plough as a ‘reverse merger’ in order to prevent a change of control provisions in Schering’s joint venture with J&J from being triggered and thereby lose control over the venture’s hit drug Remicade.  A ‘reverse merger’ is a merger in which the acquirer disappears and the target is the surviving corporation.  Steve Davidoff over at the Deal Professor had a couple of good posts at the time about the likelihood of succeeding on the theory that the reverse merger wasn’t really a change in control for purposes of the Remicade joint venture.  Anyway, the whole question of whether the reverse merger constituted a change of control for the purposes of the Remicade agreement is now in arbitration, so it will resolve itself one way or the other. 

 On November 3rd, Merck completed its acquisition of Schering.  After the reverse merger, Schering changed its name to Merck and the old Merck changed its name to Merck Sharp & Dohme Corp.  Confused? See Schering’s ... I mean ... Merck’s explanation of the name change here.  And how about this for confusion – old Merck shareholders traded in the Merck shares and got … well … they got Merck shares.  That wouldn’t be so bad, except for most of them they also incurred brokers fees for the privilege!  Now they’re complaining. (HT: Aaron)



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Good post.Thanks for information.

Posted by: Penny Stocks | Dec 22, 2009 2:19:33 AM

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