Deals: Pharma Is the Cure for M&A’s Blahs

In our M&A Roundup for the week ended March 15, Merck-Schering is followed — at a distance — by Gilead Sciences buying CV Therapeutics. Behind them, an eclectic mix.

As expected, pharmaceuticals ruled the week in North American dealmaking, overpowered by the $43.2-billion Merck & Co. purchase of Schering-Plough Corp. And another pharma deal, between Gilead Science Inc. and CV Therapeutics Inc., sneaked in as number-two, about $42-billion behind it.

The rest of the top ten transactions, though, were an eclectic brew of natural-resources, banking, and even apparel deals, according to data provided to CFO.com by mergermarket. At the top of that “also-ran” list was St. Louis-based Arch Coal Co.’s $761-million purchase of a mining property from London’s giant Rio Tinto plc.

The 24 deals struck last week — while worth a rousing $46.84 billion — represented a slip from the 32 transaction of the prior week. Because of teh relative lack of Merck-style blockbusters, that week’s action had topped out at only $4.38 billion.

For the year-to-date, 407 deals now have been struck, for a total of $186.78 billion. Because of the relative lack of blockbusters last year, the 937 transactions of 2008 at this time were worth a mere $109.62 billion.

Merck & Co. to buy Schering-Plough Corp. for $43.20 billion

Kenilworth, N.J.-based health-care company Schering-Plough definitively agreed to combine with Whitehouse Station, N.J.-based pharmaceutical giant Merck for cash and stock carrying a premium of 33.9 percent. Both boards approved the transaction, to be structured as a reverse merger. The price per share of Schering-Plough is $10.50 and 0.5767-share of the combined company, representing a value of $23.61. The cash portion, which represents about 44 percent of the total price, will be financed with a combination of $9.8 billion from existing cash balances and $8.5 billion from committed financing to be provided by JPMorgan. The deal is expected to close in the fourth quarter.
Seller financial advisor: Goldman Sachs; Morgan Stanley
Bidder financial advisor: JPMorgan
Seller legal advisor: Shearman & Sterling (Advising Morgan Stanley); Skadden Arps Slate Meagher & Flom; Sullivan & Cromwell (Advising Goldman Sachs); Wachtell, Lipton, Rosen & Katz
Bidder legal advisor: Davis Polk & Wardwell (Advising JPMorgan); Fried Frank Harris Shriver & Jacobson

Gilead Sciences Inc. to buy CV Therapeutics Inc. for $1.31 billion

Palo Alto, Calif.-based biopharmaceutical company CV definitively agreed to be acquired by Foster City, Calif.-based Gilead. CV focuses on applying molecular cardiology to the discovery, development, and commercialization of small-molecule drugs for the treatment of cardiovascular diseases. Gilead focuses on small-molecule therapeutics in relation to life-threatening infectious diseases. Both boards approved the merger at $20 a share, a premium of 25 percent. Gilead intends to finance the transaction with cash on hand, and expects the transaction to close in the second quarter.
Seller financial advisor: Barclays Bank; Goldman Sachs
Bidder financial advisor: Bank of America Merrill Lynch
Seller legal advisor: Cravath Swaine & Moore (Advising Goldman Sachs); Latham & Watkins
Bidder legal advisor: Cooley Godward Kronish; Willkie Farr & Gallagher (Advising Bank of America Merrill Lynch)

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