One of our Monday morning posts on the
acquisition of Schering-Plough Corp. (NYSE:SGP) by Merck & Co. (NYSE:MRK) focused on the way the deal will bring Merck into consumer products and boost its presence in animal health, especially the high-growth business of high-tech searches for lost pets.
There's since been a bit more news on the animal health front. Merck currently participates in animal health via its Merial joint venture with Sanofi Aventis, created in 1997 when Merck spun its animal health business into the venture. Now Bloomberg reports that Merck
may be selling its half of Merial. A Merck spokesperson, however, told Bloomberg it's too early to speculate about conclusions that may be reached through the integration work.
It's not too early to lay out the options for the JV, though. The status quo's probably no good, since it pits Merial against Schering's animal health biz. Buying out Sanofi Aventis is probably not a good idea, since even if Sanofi wants to sell, it's another big transaction (and a complicated integration) at a time when there's already plenty to do.
Selling Schering's animal health business might be an option, but Schering does seem awfully pleased with that new pet-finding business. What's more, that business is led by Brent Saunders, president of Schering's consumer healthcare business and the man leading the integration on the Schering side.
All this would seem to argue for Merck to sell its half of Merial, and in the process bring in some cash to help fund the Schering deal. -
Kenneth Klee
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