Merck gains big-time on Schering deal

Investors blew kisses at Merck last week. Apparently they were giddy over the Schering-Plough deal: Merck stock gained 23 percent over Thursday and Friday, its biggest two-day gain ever, closing Friday at $27.07. And that kind of gain isn't peanuts, dollarwise. As Dow Jones points out, the two-day rally added more than $10.8 billion to Merck's market cap.

Some good-news triggers helped: The Lancet published data favorable to Schering's anticlotting drug candidate TRA. And in a Friday note to clients, Sanford Bernstein analyst Tim Anderson upgraded Merck to outperform, calling the company a "best-in-class grower." Anderson's new price target for Merck shares is $30.

And Credit Suisse's Catherine Arnold predicted Friday that the combined company would be able to retain its rights to Remicade and a follow-up drug, despite partner Johnson & Johnson's silence on the deal. J&J could attempt to nab full rights to the lucrative med, and some analysts have even theorized that J&J might make a rival bid for Schering.

Meanwhile, Schering agreed to pay $165 million to settle an old shareholder lawsuit that accused the drugmaker of failing to disclose manufacturing problems in 2000-2001. Schering denies wrongdoing. A settlement hearing is scheduled for June 1.

- read the Dow Jones story
- see the settlement news in Forbes