Great: A big deal! Merck / Schering-Plough

Posted on Wednesday, 11 March 2009. Filed under: Commentary, Mergers |

It’s nice to see that I can hold my head up high in my Mergers & Acquisitions classes again and say that the M&A market isn’t dead … despite many obituaries having been written recently by many in the press. 

I was teaching Mergers & Acquisitions with a group of non-executive directors in the healthcare industry earlier this week.  It’s been a long time of teaching since I’d been able to discuss a current deal with my class.  Thank you, Merck.  I have a new class of MBA students that starts on Thursday of this week and it is great that I can kick off the class with some discussion of a front-page mega deal.

The news was that earlier this week, Merck announced a mega-deal in agreeing to take over it’s rival Schering-Plough for $41 billion.  This was the second big global pharmaceutical deal in six weeks (following Pfizer’s $67 billion purchase of Wyeth).   Do two deals make a trend?

Why does this make me so happy?  Simple.  The deal made the front page of the Financial Times (see the story that appeared on the front page 10 March 2009 here).  I could hold up the paper in class and say ‘See, here’s a deal that we can discuss.’  Current deals are always more fun (not that the ‘old’ deals are unexciting:  I certainly enjoy teaching the case study I wrote on Malcolm Glazer’s acquisition of Manchester United (I think the football (soccer) fans in the class enjoy it as well, even if they are Arsenal, Chelsea or even Bayern Munich supporters) or the very exciting takeover attempt by Sir Philip Green of Sir Stuart Rose’s Marks & Spencer).  Note that two years ago when I went into a lecture or conference, I could hold up the Financial Times and say:  ‘Look at today’s paper:  there’s four major stories on the front page and each one is about a merger or acquisition.’  I don’t anticipate being able to do that for a while, but even one story on the front page is helpful and encouraging!

As icing on the cake, Federal Reserve Board chairman Ben Bernanke yesterday said ‘I think there is a good chance the recession will end later this year…’

It was also refreshing to see another ‘back to the future’ headline in the Financial News‘Morgan Stanley tops M&A league table with Shering-Plough Deal’ which went on to explain that Morgan Stanley had finished fifth in the global league tables last year but is now in first place year-to-date.  Does this mark further return to normality in the markets?

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