Schering-Plough Corp. has approved a transaction to acquire Organon BioSciences N.V., the human and animal health care businesses of Akzo Nobel N.V., for about $11 billion in cash ($14.4 billion based on closing exchange rate on March 9, 2007). The transaction, which is expected to close by the end of 2007, is anticipated to be accretive to Schering-Plough's earnings per share by about 10 cents in the first full year, excluding purchase-accounting adjustments and acquisition-related costs.
"With this transaction we take another major step in our Action Agenda to transform Schering-Plough into a global high-performance company for the long term," Fred Hassan, chairman and chief executive officer, Schering- Plough, said in a release. "It is the right deal at the right time as we accelerate into the Build the Base phase of our transformation."
Organon BioSciences provides Schering-Plough with a steadily growing base of products and businesses with top-line sales of nearly $5 billion. The pharmaceutical business, Organon, had sales of $3.4 billion in 2006 (based on closing exchange rate on March 9, 2007), including leading products such as Follistim/Puregon, a follicle-stimulating hormone for infertility; Esmeron/Zemuron, a muscle relaxant; and NuvaRing and Implanon for contraception. In addition, the animal health business, Intervet, with sales of approximately $1.5 billion in 2006, is one of the top three animal health care companies globally, with products treating a broad array of animals and disease states.
Financially, Schering-Plough expects the transaction to be accretive in the first full year, excluding purchase-accounting adjustments and acquisition-related costs. Schering-Plough expects to achieve annual synergies of $500 million; it will take three years from the closing to reach this level of synergies. Schering-Plough will finance the acquisition through a mix of cash, debt and equity.
Organon's research and manufacturing facility in Oss, the Netherlands, will be the center of Schering-Plough's global gynecology and fertility activities, while Organon's neuroscience research will continue in Newhouse, Scotland.
On the animal health side, this acquisition creates a leading animal health business based on 2006 sales. The businesses are strong and complementary. Intervet's products include Nobivac, a range of canine vaccines; Panacur, a de-wormer; Bovilis, a bovine biological for disease control and eradication; and Nobilis, a poultry vaccine to keep flocks free from infectious disease.