Merck & Co. (Whitehouse Station, NJ) and Schering-Plough (Kenilworth, NJ) completed a definitive merger agreement under which Schering-Plough stockholders will receive $23.61 per share. The amount is approximately 34% more than Schering-Plough’s closing price on March 6, 2009. The total value of the transaction is roughly $41.1 billion, according to a company press release.

The transaction will be structured as a reverse merger; Schering-Plough will survive as the public corporation, but will be renamed Merck. Richard T. Clark, Merck’s president and chief executive officer (CEO), will lead the combined company, which will be based in Whitehouse Station. Fred Hassan, CEO of Schering-Plough, will help plan the integration, according to the press release.

The combined company will have a broad product portfolio that encompasses therapeutic areas such as cardiovascular, respiratory, oncology, neuroscience, infectious disease, immunology, and women’s health. In addition, the portfolio will include biopharmaceuticals such as Schering-Plough’s arthritis drug Remicade. Merck will also acquire various Schering-Plough products that will retain patent exclusivity for several years such as the Nasonex allergy medicine, Pegintron hepatitis treatment, and cholesterol drugs Vytorin and Zetia. The company will enjoy a large pipeline as well, and the transaction will double the number of Merck’s Phase III products to 18.

Another of the merger’s benefits for the two companies is the expansion of their global presence, resulting partly from Schering-Plough’s holdings outside of the United States. The combined company is expected to earn more than 50% of its revenue outside the US, according to the press release. Its expanded manufacturing capabilities will help the company meet projected increases in demand for biologics and sterile medicines.

Merck and Schering-Plough expect the merger to produce annual cost savings of about $3.5 billion after 2011, according to the press release.

Merck and Schering-Plough expect to complete the transaction in the fourth quarter of 2009, provided it is approved by the companies’ shareholders and regulatory agencies.

For Erik Greb’s blog post about the merger, click here.