Six Firms Advise on $41 Billion Pharmaceutical Merger

Renowned pharmaceutical companies Merck & Co., Inc. and Schering-Plough Corporation have agreed to merge under the name Merck in a cash and stock transaction worth $41.1 billion.

Under the terms, Schering-Plough shareholders will receive 0.5767 Merck shares and $10.50 in cash for each share of Schering-Plough, representing a value of $23.61 per share, based on the closing price of Merck stock on March 6. Each Merck share will automatically become a share of the newly merged company.

Merck shareholders are expected to own 68 percent of the combined company and Schering-Plough shareholders will own the remaining 32 percent. Merck Chairman, President and CEO Richard T. Clark will lead the new drug conglomerate.

Merck, based in Whitehouse Station, NJ, is one of the largest pharmaceutical companies in the world with approximately 61,500 employees.

Founded in 1851, Schering-Plough is the manufacturer of such allergy drugs as Claritin and Clarinex. The Dr. Scholl’s brand owner employs about 50,000 people.

Wachtell, Lipton, Rosen & Katz was counsel to Schering-Plough.

Corporate partners Martin Lipton, Andrew R. Brownstein and Gavin D. Solotar led the Wachtell team of partners Michael H. Byowitz and David A. Schwartz, antitrust; Jeremy L. Goldstein, executive compensation and benefits and Jodi J. Schwartz, tax. Associates included Ronald C. Chen and Valentina Cassata, corporate; Daniel E. Hemli, antitrust; Michael Krasnovsky, executive compensation and benefits and Vincent G. Kalafat, tax, all in New York.

Skadden, Arps, Slate, Meagher & Flom advised Schering-Plough on tax issues.

Tax partners Paul Oosterhuis, Hal Hicks and Eric Sensenbrenner in Washington, D.C. and Mitchell Solomon in New York advised.

Sullivan & Cromwell mergers and acquisitions partners George J. Sampas and Stephen M. Kotran and corporate associate Ken S. Myers represented Goldman Sachs, financial adviser to the pharmaceutical company.

Morgan Stanley, also advising Schering-Plough, relied on Shearman & Sterling for legal advice.

The New York-based Shearman team was led by partners Peter Lyons and Eliza Swann, and associate Jessica Nielsen, all mergers and acquisitions.

Merck sought counsel in Fried, Frank, Harris, Shriver & Jacobson.

Fried Frank tapped New York partners David Shine and Phillip Richter, mergers and acquisitions; F. William Reindel and Damian Ridealgh, finance; Arthur Fleischer, Murray Goldfarb, Brian Mangino, Stuart Gelfond and Michael Levitt, corporate; Robert Cassanos and Michael Alter, tax; Douglas Flaum and Michael de Leeuw, litigation; Henry Lebowitz, intellectual property and technology; Laraine Rothenberg, employee benefits and plans, and Peter Guryan and London-based Craig Arnott, antitrust. Associates were New York-based Elijah Hammans, Jason Juceam, Ilan Katz, Keriann Masters, David McDonald, Rachel Mervis, Markus Meuller, Viktor Okasmaa, Jonathan Riskin, Marianna Shelenkova and Maxwell Yim, corporate; Amy Blackman and Todd McCafferty, employee benefits and plans; Alexander Kim and Julie Newman, intellectual property and technology; Randy Eisensmith, Donna Mussio and Coleman Kennedy, litigation; Dawn Duffy and Washington D.C.-based Andrew Wogman, tax and Elizabeth O’Neil, London-based Ianis Girgenson and Tobias Caspary, antitrust. Alyson Redman, antitrust, was special counsel in New York.

Davis Polk & Wardwell was counsel to JPMorgan Securities, financial adviser to Merck.

Davis Polk called on partners Nancy L. Sandborn, Bradley Y. Smith and Richard D. Truesdell Jr., corporate and Kathleen L. Ferrel, tax; along with corporate associates David L. Portilla, Jason Kyrwood and Andrew M. Delia; all in New York.


Davis and Shearman Handle Ford Restructuring

Ford Motor Co. has announced a restructuring in the form of a swap offer in attempts to retire $10.4 billion in debt.

The reeling automaker has offered to pay a cash premium to convert its $4.88 billion in convertible notes due in 2036 into shares of Ford’s common stock. Shareholders who choose to convert their notes will receive 108 Ford shares and $80 in cash per note.

The company has also commenced a separate $1.3 billion cash tender offer for Ford’s unsecured, non-convertible debt securities and another $500 million offer for Ford’s senior secured term loan debt.

Ford tapped Davis Polk & Wardwell.

The New York-based Davis Polk team included partners Donald S. Bernstein, Michael Kaplan and Larry E. Wieman, corporate and Kathleen L. Ferrell, tax. Associates were Amber D. Derryberry, Molly C. Breyfogle, Kenneth Charles Piercy, Eilleen J. Park, E. Ashley Harris, corporate and Joshua Ruland and Matthew Kohly (not yet admitted), tax.

Shearman & Sterling capital makets partners Lisa Jacobs and Michael Benjamin represented dealer managers Goldman Sachs, Blackstone Advisory Services, Citigroup, Deutsche Bank, JPMorgan, Banc of America Securities and Morgan Stanley; both in New York.


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