Chapter 10 Mergers And Acquisitons

     Chapter 10 the books talks about acquisitions and mergers.  The difference between the two is that an acquisition is the transfer of ownership through stock purchase or exchange and merger is the consolidation or combination of one firm with another.  Merck being the multi-billion dollar company it is has definitely made it share of acquisition the past 10-20 years and then they turn that acquisition into a merger.

     The biggest acquisition that Merck has had in the past few years is acquiring Schering-Plough in late 2009 for roughly $41 billion dollars and stock.  So why buy another major company, well as I have mentioned in many previous blog posts Merck wanted a certain product or products that Schering-Ploug was producing in R&D.  The main drug the company was producing was vorapaxar.  This particular drug which is found in magnolia trees is suppose to help with blood thinning.  Schering-Ploug also provided Merck with Coppertone and Dr. Scholl's as well as better global reach.  About 70% of Schering's revenue comes from outside the United States. 

     As I have done my research on Merck, they have continuously bought up smaller companies for around $500 million or less just to take advantage of a particular drug or two that is ready to go on the market and make money.  When you have close to $40 billion in revenue for a year, $500 million is only about 2% of its annual revenue. 

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Acquisition