Merck, Schering-Plough set to complete merger

Pfizer Inc, the world largest drugmaker, closed its roughly $67 billion acquisition of Wyeth last month.

Merck said it and Schering-Plough would begin combined operations on Wednesday under the Merck name after the deal gained clearance from regulatory authorities in China and Mexico.

Under the terms of the agreement, Schering-Plough shareholders will receive 0.5767 shares of the newly combined company and $10.50 in cash for each share of Schering-Plough. Each Merck common share will automatically become a common share of the newly combined company.

Merck said it has appointed Wells Fargo Shareowner Services as agent to exchange the Schering-Plough common stock.

To pave the way for its purchase of Schering-Plough, Merck in July agreed to sell its half-stake in the Merial pet care business for $4 billion to partner Sanofi-Aventis SA.

Merck is expected to reap huge cost savings from the Schering-Plough merger by cutting 15 percent of the companies' combined workforce.

It will acquire a number of valuable Schering-Plough drugs. But its overseas rights to blockbuster rheumatoid arthritis drug Remicade and to a newer once-monthly arthritis drug called Simponi remain in dispute.

Schering-Plough years ago acquired the rights to Remicade and Simponi from Johnson & Johnson, which sells Remicade in the United States. Simponi last month won approval in Europe.

But Johnson & Johnson claims the Merck merger constitutes a change-of-control under its long-standing agreement with Schering-Plough, allowing J&J to take back overseas rights to Remicade and Simponi. An arbitrator is expected to settle the dispute.

Merck shares were down 41 cents at $30.85 in afternoon trading on the New York Stock Exchange. Schering-Plough shares were off 13 cents at $28.27 in what will be its final day of trading on the NYSE.

(Reporting by Bill Berkrot and Ransdell Pierson; Editing by Tim Dobbyn and Gerald E. McCormick)