Merck raises $4B as FTC studies merger

Merck and Schering-Plough merger news: Merck is raising the money to make the deal, but FTC regulators want their chance to order animal health spin-offs. No worries, the drugmakers say. They expected FTC to come snooping around. And they still expect the deal to close as scheduled during Q4.

Merck went ahead and sold $4.25 billion in debt to help finance the merger, anyway. The offering was $750 million more than the drugmaker initially said it planned to raise. It included four tranches, from two-year notes expected to yield 75 basis points over T-Bills up to 30-year bonds priced at T plus 145 basis points. In all, it's about 10 percent of the $41 billion Schering buyout.

Meanwhile, the Federal Trade Commission made a second request for info from the two companies, mainly about their animal-health operations. On June 3, Merck said it plans to sell one of the companies' animal health units to help fund the deal and cut down on overlap. It's the overlap, of course, that makes FTC crazy, because the agency is trying to make sure that companies don't have too much sway over particular industry segments.

If that sale doesn't satisfy the FTC, then Merck and/or Schering may have to sell off more products, an analyst told the Boston Globe. "There's going to be that many more products for sale,'' David Moskowitz of Caris & Co. told the paper. Welcome words for a few potential suitors, such as Eli Lilly which has said it wants to grow in animal health. Then there's Sanofi-Aventis, which is Merck's partner in Merial, which makes the Frontline flea-and-tick repellent. Sanofi chief Chris Viehbacher (photo) said back in April that he'd be interested in buyout out Merck's share.

- see Reuters' debt news
- get the FTC story from the Globe