SEC probes Schering trades on eve of Merck deal

Recall, if you can, the beginning of March, when Merck and Schering-Plough announced their $46 billion megamerger. At the time, a few intrepid folks pointed out a spike in Schering stock on Friday, March 6, just three days before the big announcement on March 9. SGP ended that Friday 8 percent higher than it began; could it be that some insiders were trading up the stock in advance of the deal announcement?

Well, the Securities and Exchange Commission now wants to know the answer to that question. The buyout price was $23.61, a 34 percent premium even to Friday's close, so anyone who bought shares May 6 were assured a big-time profit. And if folks with inside info were the profit-seekers.

But the SEC is far from assured of making a case. After all, pharma was in the middle of merger mania at the time, with new deals announced every Monday (or so it seemed). Schering was widely touted as a buyout prospect. And Merck and Schering had actually been linked in speculative news reports; not surprisingly, because they'd been in negotiations for months when they finally struck a deal.

Both companies declined comment for the Wall Street Journal's article, and the SEC typically doesn't talk about ongoing investigations. So we'll have to wait and see whether cold, hard evidence emerges. 

- read the WSJ article [1]
- check out the post [2] at the WSJ Health Blog

Related Articles:
Zacks: Merck will benefit from Schering deal [3]
Will the Schering deal tarnish Merck? [4]
Merck nabs Schering-Plough in $41.1B deal [5]
Merck priority for 2009: Dealmaking [6]
Merck CEO open to big-time M&A [7]