Reuters writes that the final grade on the Merck-Schering-Plough mega-merger may depend on how the J&J and Merck arbitration hearing over Remicade concludes. If Merck loses, then its stock will likely go down another 5-9% according to analysts. What's more? Remicade (and its follow on Simponi) and S-P's Vytorin (vorapaxar) were two of the three big reasons Merck bought S-P. Vytorin is already by the boards and should Merck also lose rights to Remicade and Simponi in Europe - it will make the S-P acquisition look like a real bust.
What looked like a "cheap" acquisition as mega-mergers go, at a multiple of 13 times sales (compared to 27 to 56 seen at the time), will now look and feel more expensive. The bloom will be off the rose.The arbitration result could come at anytime between now and the Spring.
Posted by Bruce Lehr Feb 11th 2011.