Early Monday Blockbuster - Merck to Buy Schering-Plough for $41B

It will be a busy Monday for business-health journalists as Merck announces it will acquire Schering-Plough Corp. in a deal valued at $41 billion.  Health.NewsBios is blogging media coverage of the combination here, now, and throughout the day.  Check back for frequent updates.

• The math just doesn't add up for The Wall Street Journal and Dow Jones Newswires, which can't seem to make up their minds as to the true value of the Merck bid for Schering-Plough.  Frankly, it's embarrassing.
  
  On Health Blog this afternoon (2:13 p.m.), Journal reporter Sarah Rubenstein wrote: "Though Merck and Schering-Plough put it at $41.1 billion, it clocks in at $32.6 billion when taking into account only the cash and stock that Schering-Plough shareholders will receive.  The other $8.5 billion is Schering-Plough debt that Merck will take on."
  
  Later, at 4:16 p.m., James A. White repeats the $32.6 billion figure, which is repeated a third time by DJNS's Peter Loftus at 4:58 p.m.  Then at 5:57 p.m. EDT, DJNS runs a correction to Mr. Loftus's story saying the correct figure is "a cash-and-stock deal with an equity value of about $41.1 billion."  Oh, my!
  
  They can't all be right, but they could all be wrong if the $32.6 billion figure first mentioned by Rubenstein was in error. 
  
  We'll try to see if anyone at the Journal or DJNS cares to explain.  Usually, Journal folk don't respond to Health.NewsBios requests for comment.
  

• Roche Holding AG has raised its bid for Genentech to $95 a share says Jessica Hall at 5:44 EDT on the Reuters.com site.  Hall attributes the news to "a source familiar with the situation." Earlier, The Wall Street Journal speculated that such a move could happen today, although no official word on the matter has come from Roche.
  
  Hall writes as if it is a done deal.  The higher price "marks the second increase since  Friday," she says.  "'The new price was enough to get both sides to the table,' said the source, who was not authorized to speak to the press," Reuters reported.
  
  It is interesting that this unauthorized source, who is supposedly violating a fiduciary confidentiality, is still trustworthy enough for Reuters to count on him or her.  Usually in similar circumstances, unauthorized sources are in fact 'authorized,' only they want to make it seem they are not.  That is how the game is played.

• Kudos to Bloomberg News's Alex Nussbaum and Shannon Pettypiece who on Saturday wrote, Schering-Plough May Be Next Drugmaker Acquired by a Rival. How did they know?  The two reporters didn't miss the fact that on Friday, March 6th, shares of S-P rose the most in a month.
  
  Now, James A. White over at WSJ.com is blogging that "if the Securities and Exchange Commission wants to prove its worth after missing Madoff and other scandals, perhaps it might take a look at the latest instance of a pre-merger stock runup."  White credits the Journal's Heidi N. Moore for reporting that today's blockbuster announcement "doesn't seem to have been a surprise to everyone in the markets."

• You won't find any streaming video on the Merck-Schering combination at WSJ.com, unlike January 26th when Pfizer agreed to buy Wyeth.  Why not?  Could it be because last month the Journal laid off long-time pharmaceutical reporter and editor, Scott Hensley, who did the video duties in January?  Hensley also oversaw the site's Health Blog and helped supervise reporters Jacob Goldstein and Sarah Rubenstein.
  
  Health.NewsBios has tried to get the Journal's PR department or John Carreyrou, Health & Science editor for the paper, to tell us who will now oversee Health Blog.  But no one has responded to our inquiries.  It always strikes us as ironic that journalists such as Carreyrou, who admonish companies to be more open to press queries, go hiding when they themselves are approached by a reporter working on a story.  We'll bet Carreyrou & Company are missing Hensley's talents and experience today!

• Out of curiosity and to make sure we are not missing any important coverage, we clicked on over to the homepage of Investor's Business Daily to see what that paper has to say about the Merck deal.  The answer: nothing.  At 4:48 p.m. EDT, the word "Merck" appears nowhere on the paper's main page.

• The Financial Times, down one pharma reporter with the departure of Boston-based Rebecca Knight, has put together an impressive package of coverage nonetheless, led by London-based Andrew Jack, a journalism workhorse.
  
  Health.NewsBios is particularly impressed with Jack's An dose of pharmaceutical competitiveness, which offers some fly-on-the-wall details concerning how the deal was struck.  "Last December, only weeks after Barack Obama had won the race for the US presidency, Richard Clark, the head of Merck, arranged a meeting with Fred Hassan, his opposite number at Schering-Plough," Jack writes.
  
  Jack says the holdup in agreeing on a deal surrounded price.  S-P, Jack states, "was being courted by another New Jersey peer, Johnson & Johnson, which some analysts argue was a closer fit."
  
  Jack's Lex colleagues quickly posted their own take on today's announcement: "Allow for these synergies, and Merck's post-tax return on investment will be a respectible 10 per cent," Lex calculates, a figure not spotted elsewhere in the media today.
  
  In New York, M&A reporter Julie Macintosh offers her take on a streaming video available from FT.com.
  
  Photo: Julie Macintosh

• Certainly every journalist covering the Merck acquisition would like to interview CEO Richard Clark today.  So it is interesting to note who gets to the big guy, and who is left quoting his statements or interviewing members of the public relations department.
  
  Bloomberg News's Shannon Pettypiece, in her most recent story iteration, quotes from an interview with Clark.  Score one for Pettypiece!
  
  "What convinced me as a CEO of Merck was to have our head of research come back and talk about the quality of the scientific programs," Pettypiece quotes Clark as saying during a telephone conversation.  "This is about the science and not just synergies and that is what makes this different than other deals in the past."
  
  Among the likely factors weighing on which journalists get access to Clark and which don't: who their readers and viewers are; who the Merck public relations executives trust to be balanced; which reporters hustle the hardest. Chances are those journalists who don't perform well on all three criteria get handed the news release.

• Veteran Reuters pharma reporters Edward Tobin and Ransdell Pierson share a byline on the wire's 2:35 p.m. post at Reuters.com.  Ben Hirshler in London and Sam Cage in Zurich also contribute, with editing by Lisa Von Ahn and Andre Grenon.
  
  Their afternoon update notes that Merck has deeper pockets than Schering-Plough and "would help fund research on Schering-Plough products, including promising blood clot and hepatitis C drugs.  The reporters repeat analysts' speculation that Johnson & Johnson could launch a rival bid for S-P, adding that "J&J officials couldn't be reached for comment."
  
  What are the folks in the J&J public relations department doing today to be so unavailable? Ducking the press, perhaps?

• Mike Huckman has posted his first Pharma's Market item on the Merck-Schering deal, pointing out that his adopted state of New Jersey stands to be the big loser in terms of jobs and tax revenues.  New Jersey, writes Huckman on CNBC.com, "is already reeling from the banking crisis because of its proximity to and dependence on Wall Street. And now a consolidation wave in big pharma is threatening to take the state under."

• We've heard back from Phil Mintz, who we asked to explain why BusinessWeek.com is touting his reporting on the Merck merger as a "BW Exclusive".  Here's  Phil's response:

Thanks for pointing that out. That’s a technological artifact from when we used to have a module on our home page called BW Exclusives. Our story page template pulls in the top of our home page into that module. We re-named the Home Page module News and Analysis some time ago, but apparently that change never made it to our story template page. Our design folks are now on the case.

• Even while we typed the next item, Forbes' Matthew Herper was cranking out some fresh insights.  He's back with Four Thoughts on Merck-Schering. They include: "In a sense, this is the end of Merck;" and the merger "does not solve the fundamental problems regarding innovation."

• Forbes.com labels the Merck-Schering combination as "Another Merger of Weakness."  The Forbes.com homepage has a package of four pharma-related articles.  Mathhew Herper, health care reporter, writes that "more than anything else, the deal shows how tough times have gotten for drug companies."  His sources include: Barbara Ryan, an analyst at Deutsche Bank and Tim Anderson at Sanford C. Bernstein. 
  
  Herper writes that the merger will help Merck's earnings "and protect its dividend during a time when drug companies are being hurt not only by the global economic crisis but also by years in which the industry as a whole has failed to invent enough drugs."
  
  For those keeping track, Herper posted at 10:30 a.m.

• Not sure why, but BusinessWeek.com is touting its story, Merck Is Buying Schering-Plough for $41B, as a "BW Exclusive."  The story by Phil Mintz, news editor, doesn't appear to Health.NewsBios to have any real scoop.  We'll email Mintz and ask him why.

• The Wall Street Journal's Matthew Karnitschnig is reporting at 2:29 p.m. EDT that the board of Genentech Inc. is near an agreement to sell the company to Roche Holding AG for $95 a share.  Karnitschnig is the paper's M&A beat reporter.  He cites "people familiar with the matter" and said an official announcement might come as early as close of New York trading today.  A Roche spokesman declines comment.  A Genetech spokesman referred to a statement the company made on Friday urging shareholders to take no action in response to Roche's earlier $93 a share offer.

• In an interview, Schering-Plough's CEO Fred Hassan tells The Wall Street Journal's Jonathan D. Rockoff that he is not ready to retire when the merger with Merck is completed.  "One thing is for sure.  I don't hae any particular big hobbies," Hassan said.  "I don't do a lot of golf.  I don't own a boat.  I'm a worker."

• Peter Loftus of Dow Jones is back with a fresh article, J&J Is Potential Wrench in Merck/Schering-Plough Deal.  Under a 1990 agreement S-P and Johnson and Johnson co-market Remicade, an anti-inflmmatory drug, and will soon share in the marketing of golimumab, slated to go on sale in 2009.  Loftus contacted a J&J spokesman, who declined to comment.  The reporter quotes Tim Anderson, an analyst with Sanford Bernstein.

• • Three on-air reports from CNBC's Mike Huckman can now be viewed at CNBC.com.

• • WSJ.com has replaced Kevin Kingsbury's earlier coverage with a fresh story posted at 11:52 a.m. EDT by Jonathan D. Rockoff, a staff reporter at The Wall Street Journal.  Kingsbury works for Dow Jones Newswires.
  
  "With the move, Merck is forsaking its traditional reliance on homegrown research and small acquisitions to propel growth. Chief Executive Richard Clark joins a growing number of industry executives who have concluded that drug makers need to diversify in order to weather the economic downturn and the vagaries of drug development," Rockoff writes. He adds that "many executives now believe drug discovery is too unpredictable to count on."

• CNNMoney.com staff writers David Goldman and Aaron Smith are reporting for the web site. Their story was first posted at 6:56 EDT.  Goldman and Smith interviewed Les Funtleyder, pharmaceutical analyst at Miller Tabak, who said this puts pressure on Bristol-Myers Squibb and Eli Lilly to merge.

• David Jolly has the story for NYTimes.com.  He quotes David Moskowitz at Caris & Co. from a Reuters story, and Richard Purkiss at Atlantic Securities in London, who Jolly interviewed.

• WSJ.com is relying on Kevin Kingsbury of Dow Jones Newswires to anchor its morning coverage. Kingsbury repeats portions of Peter Loftus's interview with Merck CEO Richard T. Clark (below), without alerting readers that he didn't personally speak to Clark.  Kingsbury quotes David Buik of BGC Partners. 

• Nothing yet as of 10:15 a.m. online from CNBC's Mike Huckman, its pharmaceuticals reporter.  CNBC.com is using a Reuters article on the Merck acquisition.

• Shannon Pettypiece of Bloomberg News is on update #3 of her Merck-Schering story this morning, as of 10 a.m. EDT.  Writes Pettypiece, the deal "may intensify pressure on other drugmakers, including Bristol-Myers Squibb Co., to broaden their product lines and combine their research efforts as big-selling products lose patent protection."  She quotes Philippe Lanone, an analyst at Natixiis Securities in Paris, and Navid Malik at London's Matrix Corporate Capital.  Also David Moskowitz of Caris & Co., whose telephone interview is heard on Bloomberg TV as well (next item).

• Bloomberg TV is featuring a telephone interview with David Moskowitz, an analyst at Caris & Co., who says Merck isn't paying enough for Schering-Plough.  Moskowitz says that Merck is using a reverse merger to avoid losing some S-P products to Johnson & Johnson.  Moskowitz says J&J might offer a rival bid for S-P.

• Sarah Rubenstein of The Wall Street Journal's Health Blog is "live blogging" Merck and Schering-Plough's early morning analyst call. Here first post comes at 8:37 a.m. EDT:  "Merck CEO Dick Clark calls it a 'transformational event.' The combination 'makes great strategic sense and holds exceptional promise.'  As of 9:08 a.m EDT, Rubenstein is still posting.

• Ryan Vlastelica and Ransdell Pierson are tracking the story for Reuters from New York, aided by Sam Cage in Zurich and Ben Hirschler in London.  The journalists seek "Instant Views" from commentators, including Peter Kenny, Knight Equity Markets; Navid Malik, Matrix Corporate Capital; David Moskowitz, Caris & Co.; Andrew Weiss, Swiss Bank Vontobel; and Jeffrey Holford, Jeferries.

• Peter Loftus for Dow Jones Newswires lands an interview with Merck CEO Richard Clark, who tells the Philly-based journalist that Merck expects to cut its workforce by about 15% in the wake of the combination.  A large number of the cuts will come outside the U.S., Clark said. Impressive that he got the CEO on the phone when the AP (next item) had to settle for a spokeswoman.

• The Associate Press's Linda A. Johnson pumped out a fast story, Merck buying Schering-Plough in a $41 B deal, which demonstrates her personal mastery of all-things Merck. "There'll be no immediate changes" to staffing levels, Merck spokeswoman Amy Rose told The Associated Press. "Eventually, we anticipate an approximate 15 percent reduction in the combined company's headcount."

• Andrew Jack reporting for The Financial Times says the deal "will substantially strengthen Merck's products pipeline at a time of growing pressure on existing products."  His first iteration of Merck buys Schering-Plough for $41bn quotes only a Merck statement -- no executives, spokespeople or analysts.

• Early bulletin from Dow Jones Newswire's Allison Connolly in Germany:  "Schering-Plough Soars in Frankfurt Trade on Merck & Co. Deal"

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