Schering-Plough to Buy Organon Biosciences for $14.4 Billion

Schering-Plough agreed today to purchase the Organon Biosciences unit of Dutch company Akzo Nobel for 11 billion euros ($14.4 billion) cash. Akzo shares reached a five-year high on the news. Organon is the third-largest manufacturer of birth-control pills in the world. In addition to the contraceptive pill Marvelon and birth-control implant Implanon, five experimental drugs in advanced clinical trials will be added to Schering-Plough's roster by the transaction as well as "a number of promising projects'' at earlier stages. Akzo elected to sell Organon after sales disappointed last year and its asenapine schizophrenia drug, considered by analysts to have blockbuster potential, was delayed -- a development that may have steered Akzo's management away from an IPO of Organon, which it had also been considering. Schering-Plough forecasts the deal will raise EPS by $0.10 in the first year after one-time costs and adjustments. The company expects annual synergies of $500 million within three years. The transaction is expected to close by the end of this year.

Sources: Bloomberg, MarketWatch
Commentary: Jim Cramer's Stop Trading! Stock Picks and Comments, Feb. 15 • Top Picks for 2007 from JPMorgan HealthCare Analysts • Searching for Value Investments in the Drug Stock Universe
Stocks/ETFs to watch: Schering-Plough Corp. (SGP), Akzo Nobel N.V. [ADR] (AKZOY). Competitors: BASF AG (BF), PPG Industries Inc. (PPG), Wyeth (WYE), Glaxosmithkline plc (GSK), Johnson & Johnson (JNJ), Sanofi-Aventis (SNY). ETFs: iShares MSCI Netherlands Index (EWN), SPDR S&P Pharmaceuticals (XPH), iShares Dow Jones US Pharmaceuticals (IHE), Pharmaceutical HOLDRs (PPH)

Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.