The Australian By Amanda Meade
Saturday, March 28, 2009. THE Seven Network has censored a lesbian kissing scene in its family soapie Home and Away after a viewer backlash.
Since the lesbian story-line began two weeks ago, 100,000 viewers have turned off and complaints have been flooding in. The now-muted kiss will air on Tuesday night.
The decision was taken to play down the scene after complaints from conservative lobby groups in media reports were followed by complaints from viewers. Producers were forced to cut some of the more intimate close-up images of policewoman Charlie Buckton and deckhand Joey Collins sharing a passionate kiss after dancing together on a boat. The original scene, played by actors Esther Anderson and Katie Bell, was no more intimate than any kiss shared by a heterosexual couple, sources said.
Some mothers contacted the network to say they did not want their children exposed to same-sex relationships in a family show. Home and Away is screened at 7pm and is rated PG.
The show is popular internationally, especially with younger viewers, and attracts an Australian audience of more than one million every weeknight.
The story-line might have slipped under the radar had Melbourne's Herald Sun not written a report this month headlined "Gay TV for kids".
It made international news, including one story in Britain's The Sun headlined "Home and Away lesbian fury".
Seven's current affairs show Today Tonight did a story that featured a conservative lobby group called Pro-Family Perspectives complaining about a so-called gay agenda.
Media commentator David Knox from the TV Tonight website said yesterday the PG classification allowed for adult themes with limitations and did not discriminate between gay and straight content.
"It's sad that in 2009 a kiss is considered more threatening to advertisers and family values than stalkers, serial killers and kidnappers, all of which sustain Summer Bay story-lines on a regular basis," Knox said.
Angela Conway of Pro Family Perspectives accused the show of developing "quite sexualised plot lines". Seven drama chief John Holmes declined to comment.
Saturday, March 28, 2009
No. 1 lady detective series?
Reuters
<--- Author Alexander McCall Smith (R) answers questions with (L to R) actress Jill Scott and executive producer Harvey Weinstein during the HBO panel for "The No. 1 Ladies' Detective Agency" at the Television Critics Association winter press tour in Los Angeles January 9, 2009
REUTERS/Phil McCarten
Fri Mar 27, 2009 NEW YORK (Reuters) - "The No. 1 Ladies' Detective Agency" is the first TV series on U.S. cable network HBO with an African female lead character, but don't expect to see much about the continent's crises and conflicts.
"Many outside writers, when writing about African countries concentrate on the bleak, and on what's wrong," said Alexander McCall Smith, the author of the best-selling novels of the same name that the series is based on.
"Obviously, there are problems in many of these sub-Saharan African countries, but there are positive aspects and this series celebrates that," he said.
The series' main character is Precious Ramotswe, the owner of Botswana's only, and thus No. 1, female-owned detective agency, played by Grammy winning R&B singer Jill Scott.
According to McCall Smith, the television series, like the novels it is based on, is not really about sleuth work.
"These books aren't really about detectives, they're just about the lives of this woman and her friends," McCall Smith said. "It's a very good vehicle for talking about society and lots of different people because all sorts of people are coming through the door with their problems."
Much of the action occurs out of Ramotswe's agency in a sleepy shopping center on the outskirts of Botswana's capital, Gaborone, giving a glimpse of Botswanan life, and providing a decidedly lighter feel from traditional edgy HBO dramas, such as "The Sopranos" and "The Wire."
Filmed in Botswana, the dialogue is peppered with words in Setswana, a local language, herds of cattle make frequent appearances on screen, and early on Ramotswe has an encounter with a crocodile.
The series has already premiered on the BBC and the response has been largely positive, although some people don't like the cheerful nature of the series, McCall Smith said.
"That is often the criticism which is levied against it by people who don't know Africa at all who are so used to getting this negative picture," McCall Smith said. "They feel that anything which doesn't concentrate on that isn't realistic."
In fact, several reviews did take the view that the Africa of the "No. 1 Ladies' Detective Agency" is too simplistic.
Although Newsweek found the absence of "wailing babies with swollen bellies" refreshing, a review in the Guardian called the series "cloying" and the "No. 1 reason to change the channel."
But it is the constant focus on the negative in Africa that is unrealistic, according to McCall Smith.
"That's actually treating African countries as being something quite different, mythologized in a sense, made abnormal. Which actually really is, I think, wrong," he said.
(Editing by Michelle Nichols and Doina Chiacu)
© Thomson Reuters 2009 All rights reserved
<--- Author Alexander McCall Smith (R) answers questions with (L to R) actress Jill Scott and executive producer Harvey Weinstein during the HBO panel for "The No. 1 Ladies' Detective Agency" at the Television Critics Association winter press tour in Los Angeles January 9, 2009REUTERS/Phil McCarten
Fri Mar 27, 2009 NEW YORK (Reuters) - "The No. 1 Ladies' Detective Agency" is the first TV series on U.S. cable network HBO with an African female lead character, but don't expect to see much about the continent's crises and conflicts.
"Many outside writers, when writing about African countries concentrate on the bleak, and on what's wrong," said Alexander McCall Smith, the author of the best-selling novels of the same name that the series is based on.
"Obviously, there are problems in many of these sub-Saharan African countries, but there are positive aspects and this series celebrates that," he said.
The series' main character is Precious Ramotswe, the owner of Botswana's only, and thus No. 1, female-owned detective agency, played by Grammy winning R&B singer Jill Scott.
According to McCall Smith, the television series, like the novels it is based on, is not really about sleuth work.
"These books aren't really about detectives, they're just about the lives of this woman and her friends," McCall Smith said. "It's a very good vehicle for talking about society and lots of different people because all sorts of people are coming through the door with their problems."
Much of the action occurs out of Ramotswe's agency in a sleepy shopping center on the outskirts of Botswana's capital, Gaborone, giving a glimpse of Botswanan life, and providing a decidedly lighter feel from traditional edgy HBO dramas, such as "The Sopranos" and "The Wire."
Filmed in Botswana, the dialogue is peppered with words in Setswana, a local language, herds of cattle make frequent appearances on screen, and early on Ramotswe has an encounter with a crocodile.
The series has already premiered on the BBC and the response has been largely positive, although some people don't like the cheerful nature of the series, McCall Smith said.
"That is often the criticism which is levied against it by people who don't know Africa at all who are so used to getting this negative picture," McCall Smith said. "They feel that anything which doesn't concentrate on that isn't realistic."
In fact, several reviews did take the view that the Africa of the "No. 1 Ladies' Detective Agency" is too simplistic.
Although Newsweek found the absence of "wailing babies with swollen bellies" refreshing, a review in the Guardian called the series "cloying" and the "No. 1 reason to change the channel."
But it is the constant focus on the negative in Africa that is unrealistic, according to McCall Smith.
"That's actually treating African countries as being something quite different, mythologized in a sense, made abnormal. Which actually really is, I think, wrong," he said.
(Editing by Michelle Nichols and Doina Chiacu)
© Thomson Reuters 2009 All rights reserved
Woman arrested after shackling self to husband...
Tue Mar 24, 2009 8:33pm EDT. HARTFORD, Connecticut (Reuters) - An American woman handcuffed herself to her sleeping husband in an apparent attempt to resolve an argument, but police ended up breaking into their home and charging her with assault and other crimes, authorities said on Tuesday.Helen Sun, 37, handcuffed herself to Robert Drawbough as he slept in their Fairfield, Connecticut, home on Monday in an effort to reconcile their differences, police said.
But when Drawbough called police with his cell phone, Sun responded by biting him on the arms and torso, police said.
Police officers heard screams when they arrived at the home and forced their way in, said Chris Lyddy of the Fairfield Police Department. Sun had also changed the locks on their bedroom door.
Sun was charged with third-degree assault, disorderly conduct, reckless endangerment and unlawful restraint. She was released on a $400 bond.
"I can't say I've ever seen a scenario quite like this," said Lyddy.
(Reporting by Jason Szep; Editing by Cynthia Osterman)
© Thomson Reuters 2009 All rights reserved
Thursday, March 12, 2009
Telstra ups cable to 100Mbps, dwarfs NBN speeds...
PC World Darren Pauli (Computerworld
10/03/2009 10:15:00 Sol Trujillo - CEO Telstra Telstra today announced sweeping upgrades to its national Hybrid Fibre Coaxial (HFC), or cable, network which will see 1.8 million Melbourne homes receive Internet access speeds of up to 100Mpbs by years' end.
The upgrades will improve the telco's HFC network in Melbourne, Sydney, Brisbane, Adelaide and Perth, and dwarf the government's proposed minimum 12Mpbs speeds for the National Broadband Network (NBN).
The speed of Telstra's Melbourne network will more than triple thanks to a rollout of the DOCSIS 3.0 (Data Over Cable Service Interface Specification) at a total upgrade cost of $300 million.
Outgoing Telstra CEO Sol Trujillo said the latest DOCSIS version has been successfully rolled out overseas.
“Late last year, Telstra foreshadowed that we would continue our investment in our cable network and, with the DOCSIS 3.0 software now well established internationally, we have the ability to dramatically increase speeds into Australian homes,” Trujillo said in a statement.
“Now we are going to [have] super-fast broadband with download speeds among the highest in the world.”
Some analysts considered the DOCSIS technology a spare card to allow Telstra to tighten competition between its HFC network and the looming NBN.
The telco said further upgrades could push the network to speeds of 200Mpbs. In Melbourne, network speeds of 30Mpbs go to 1.8 million homes and 17Mpbs to some 700,000, the company said.
Trujillo last month said the company's is unperturbed by it's exclusion from the $4.7 billion taxpayer-funded NBN and said it will build on its Next G, HFC and fibre backhaul networks.
Telstra chairman Donald McGauchie told reporters last month in Sydney its exclusion from the NBN will not jeopardise its market position.
“It would be nice if this country got off the political kick and got on to the innovation investment concept and understand that there are a lot of ways to skin a cat,” McGauchie said.
He claimed the NBN will have no impact on Telstra's financial guidance and will present “major challenges for the operator” in terms of technology, logistics and legal challenges.
Trujillo said in a presentation made at the Citigroup Entertainment, Media and Telecommunications conference in the US the company will lose $1-$2 billion in future revenue.
The national HFC network reaches 2.5 million homes and the DOCSIS 3.0 upgrades will start immediately
10/03/2009 10:15:00 Sol Trujillo - CEO Telstra Telstra today announced sweeping upgrades to its national Hybrid Fibre Coaxial (HFC), or cable, network which will see 1.8 million Melbourne homes receive Internet access speeds of up to 100Mpbs by years' end.
The upgrades will improve the telco's HFC network in Melbourne, Sydney, Brisbane, Adelaide and Perth, and dwarf the government's proposed minimum 12Mpbs speeds for the National Broadband Network (NBN).
The speed of Telstra's Melbourne network will more than triple thanks to a rollout of the DOCSIS 3.0 (Data Over Cable Service Interface Specification) at a total upgrade cost of $300 million.
Outgoing Telstra CEO Sol Trujillo said the latest DOCSIS version has been successfully rolled out overseas.
“Late last year, Telstra foreshadowed that we would continue our investment in our cable network and, with the DOCSIS 3.0 software now well established internationally, we have the ability to dramatically increase speeds into Australian homes,” Trujillo said in a statement.
“Now we are going to [have] super-fast broadband with download speeds among the highest in the world.”
Some analysts considered the DOCSIS technology a spare card to allow Telstra to tighten competition between its HFC network and the looming NBN.
The telco said further upgrades could push the network to speeds of 200Mpbs. In Melbourne, network speeds of 30Mpbs go to 1.8 million homes and 17Mpbs to some 700,000, the company said.
Trujillo last month said the company's is unperturbed by it's exclusion from the $4.7 billion taxpayer-funded NBN and said it will build on its Next G, HFC and fibre backhaul networks.
Telstra chairman Donald McGauchie told reporters last month in Sydney its exclusion from the NBN will not jeopardise its market position.
“It would be nice if this country got off the political kick and got on to the innovation investment concept and understand that there are a lot of ways to skin a cat,” McGauchie said.
He claimed the NBN will have no impact on Telstra's financial guidance and will present “major challenges for the operator” in terms of technology, logistics and legal challenges.
Trujillo said in a presentation made at the Citigroup Entertainment, Media and Telecommunications conference in the US the company will lose $1-$2 billion in future revenue.
The national HFC network reaches 2.5 million homes and the DOCSIS 3.0 upgrades will start immediately
New, cheaper female condom wins U.S. approval...
Health Reuters By Susan Heavey
Wed Mar 11, 2009 WASHINGTON (Reuters) - Female Health Co has won U.S. approval to market its newer, less expensive female condom, which could help it win over American women as well as boost use in developing countries, the company said on Wednesday.
The company's FC2 Female Condom is made with a softer material for quieter use. Its original version failed to gain a foothold in the male condom-dominated U.S. marketplace in part because it was noisy to use, as well as more expensive.
Its new condom is made using a less costly process that company officials have said should lower its shelf price, as well as allow health organizations to distribute more of the birth control device to women in Africa and other areas where AIDS is a major concern.
The approval "is an important development in efforts to deliver affordable access to woman-initiated HIV prevention in the United States and around the world," Female Health Co's strategic adviser Mary Ann Leeper said in a statement.
The Chicago-based company's shares rose as much as 30 percent after the news. Its shares closed up 22 percent, or 68 cents, at $3.73 on the American Stock Exchange on Wednesday.
Female Health's initial Female Condom was approved in 1993 to prevent pregnancy, as well as sexually transmitted diseases (STDs), but has not been widely used in the United States, which made up just 10 percent of its 34.7 million unit sales in 2008.
The product competes with other birth control methods, most notably male condoms, which can cost as little as 50 cents each amid a variety of competing brands. The original Female Condom costs between $2.80 and $4 apiece.
While it is not clear what the retail price will be for FC2, Leeper told Reuters it will cost as little as 60 cents when sold directly to health organizations and government agencies. That will help more groups offer more condoms in the hope of preventing HIV/AIDS and other STDs, she added.
"Having a less expensive Female Condom increases the probability of women who need it having access to it," she said.
Despite the FDA's approval it could be next year or longer before U.S. consumers can buy the new condom in stores.
Female Health is still looking for a pharmaceutical or device company to help it market and distribute FC2, including possibly a male condom maker, Leeper said.
"We're just gearing up," she said. "Our wish is to find a partner who has the capacity to do a good job in getting the message out to the consumer and who has the commitment to women's health."
In the meantime, the original version will be available until inventory is sold and the FC2 will be available to U.S. women through local health agencies and groups such as Planned Parenthood, Leeper said.
Diana Zuckerman, head of the National Research Center for Women & Families, said the FC2 is unlikely to be a big seller in the United States but could win over more users elsewhere.
"I am not assuming that the Female Condom is going to be hugely popular in this country because there are so many other alternatives. I think it's going to be extremely popular in other countries where there are not affordable options," she said.
The FDA's approval allows the United States Agency for International Development and other U.S. organizations to buy the FC2 Female Condom and distribute it to global programs that try to prevent the spread of the virus that causes AIDS, the company said.
Dozens of health advocacy groups had urged U.S. approval of the new version, which the company said is already distributed in 77 other countries.
Only condoms have been proven effective at preventing STDs, but "not everybody wants to use male condoms," said Serra Sippel, executive director for the Center for Health and Gender Equity.
"(Male) condoms have been stigmatized in a lot of areas," she said, adding that female versions give "women another option in negotiating safer sex with their partners or husbands."
(Reporting by Susan Heavey; Editing by Bernard Orr, Andre Grenon, Richard Chang)
© Thomson Reuters 2009 All rights reserved
Wed Mar 11, 2009 WASHINGTON (Reuters) - Female Health Co has won U.S. approval to market its newer, less expensive female condom, which could help it win over American women as well as boost use in developing countries, the company said on Wednesday.The company's FC2 Female Condom is made with a softer material for quieter use. Its original version failed to gain a foothold in the male condom-dominated U.S. marketplace in part because it was noisy to use, as well as more expensive.
Its new condom is made using a less costly process that company officials have said should lower its shelf price, as well as allow health organizations to distribute more of the birth control device to women in Africa and other areas where AIDS is a major concern.
The approval "is an important development in efforts to deliver affordable access to woman-initiated HIV prevention in the United States and around the world," Female Health Co's strategic adviser Mary Ann Leeper said in a statement.
The Chicago-based company's shares rose as much as 30 percent after the news. Its shares closed up 22 percent, or 68 cents, at $3.73 on the American Stock Exchange on Wednesday.
Female Health's initial Female Condom was approved in 1993 to prevent pregnancy, as well as sexually transmitted diseases (STDs), but has not been widely used in the United States, which made up just 10 percent of its 34.7 million unit sales in 2008.
The product competes with other birth control methods, most notably male condoms, which can cost as little as 50 cents each amid a variety of competing brands. The original Female Condom costs between $2.80 and $4 apiece.
While it is not clear what the retail price will be for FC2, Leeper told Reuters it will cost as little as 60 cents when sold directly to health organizations and government agencies. That will help more groups offer more condoms in the hope of preventing HIV/AIDS and other STDs, she added.
"Having a less expensive Female Condom increases the probability of women who need it having access to it," she said.
Despite the FDA's approval it could be next year or longer before U.S. consumers can buy the new condom in stores.
Female Health is still looking for a pharmaceutical or device company to help it market and distribute FC2, including possibly a male condom maker, Leeper said.
"We're just gearing up," she said. "Our wish is to find a partner who has the capacity to do a good job in getting the message out to the consumer and who has the commitment to women's health."
In the meantime, the original version will be available until inventory is sold and the FC2 will be available to U.S. women through local health agencies and groups such as Planned Parenthood, Leeper said.
Diana Zuckerman, head of the National Research Center for Women & Families, said the FC2 is unlikely to be a big seller in the United States but could win over more users elsewhere.
"I am not assuming that the Female Condom is going to be hugely popular in this country because there are so many other alternatives. I think it's going to be extremely popular in other countries where there are not affordable options," she said.
The FDA's approval allows the United States Agency for International Development and other U.S. organizations to buy the FC2 Female Condom and distribute it to global programs that try to prevent the spread of the virus that causes AIDS, the company said.
Dozens of health advocacy groups had urged U.S. approval of the new version, which the company said is already distributed in 77 other countries.
Only condoms have been proven effective at preventing STDs, but "not everybody wants to use male condoms," said Serra Sippel, executive director for the Center for Health and Gender Equity.
"(Male) condoms have been stigmatized in a lot of areas," she said, adding that female versions give "women another option in negotiating safer sex with their partners or husbands."
(Reporting by Susan Heavey; Editing by Bernard Orr, Andre Grenon, Richard Chang)
© Thomson Reuters 2009 All rights reserved
Tuesday, March 10, 2009
Merck to buy Schering-Plough for $41.1 billion...
Reuters By Edward Tobin and Ransdell Pierson
Mon Mar 9, 2009. NEW YORK (Reuters) - Merck & Co Inc said on Monday it would acquire Schering-Plough Corp for $41.1 billion, uniting the makers of cholesterol drugs Zetia and Vytorin in the second megadeal for big pharma in weeks.
The deal between the New Jersey drugmakers comes amid a harsher climate for pharmaceutical companies, as they have failed to produce enough new drugs to replace old ones, and as the new Obama Administration prepares healthcare reforms that could pressure drug prices.
And it landed the same day Roche Holding AG moved closer to its long sought-after purchase of the remaining stake in Genentech Inc that it doesn't already own, with a source telling Reuters the two sides are discussing a deal for about $46.7 billion.
Schering-Plough's earnings and share price have deteriorated over the past year due to a plunge in sales of Vytorin and Zetia, its biggest products, even as several of its most promising drugs move into very costly late-stage trials.
Merck, which has seen profits and shares battered by Vytorin's decline and other setbacks, has deeper pockets and would help fund research on Schering-Plough products, including promising blood clot and hepatitis C drugs.
"The deal gives Merck more breathing room," said Mehta Partners analyst Viren Mehta, as it girds for patent expirations in 2012 on its $4-billion-a-year Singulair asthma drug and by next year for its Cozaar blood-pressure treatment.
The deal, which many analysts have forecast for years given the Vytorin partnership between Merck and Schering-Plough, follows Pfizer Inc's $68 billion planned purchase of Wyeth. Sanford Bernstein analyst Tim Anderson said it was surprising that Wyeth and Schering-Plough agreed to sell, given their depressed stocks and their robust long-term outlooks.
"What could this imply about how pharma company management teams view the future of the industry?" Anderson said.
The transaction offers a premium of 34 percent for Schering-Plough shareholders based on Friday's closing price and will generate savings of $3.5 billion annually after 2011.
Merck and Schering-Plough, which announced significant job cuts last fall, said about 15 percent of their combined workforce would be eliminated under the deal, with most job cuts to take place outside the United States.
"It seems somewhat inevitable," analyst Jeffrey Holford of Jefferies in London said of the deal, referring to an industry coping with generic rivals as cost cuts have run their course.
"The industry needs to shrink because there is just not the same market for branded pharmaceuticals going forward as there has been over the last 10 years. There is overcapacity and (Merck and Schering-Plough) need to take each other's capacity out of the market."
It will also double the number of experimental medicines Merck has in late-stage development to 18 and diversify Merck's lineup of medicines to include cardiovascular, respiratory, oncology, neuroscience and infectious disease.
Schering-Plough shareholders will receive 0.5767 shares of Merck and $10.50 in cash for each of their shares, valuing each share of Schering-Plough at $23.61.
Schering-Plough investors have reason to feel short-changed, said Caris & Co analyst David Moskowitz.
"I think it should be at least $12 billion to $15 billion higher," he said. "I don't think investors will be happy until the price comes up to the high-$20's or $30 (per share)."
Schering-Plough shares rose 14 percent to $20.25 before the market opened, and was up $2.52, or 14.3 percent, at $20.15 late Monday afternoon. Merck hit a 14-year low of $20.10, before trading down 7.8 percent at $20.96.
Merck's 4.75 percent notes due in 2015 traded weaker, with spreads widening to 149 basis points over Treasuries, yielding 4.4 percent. On March 4, in their last notable trade, the spread was 124 basis points with a yield of 4.2 percent, according MarketAxess data.
ARTHRITIS DRUG RIGHTS IN QUESTION
A big question is whether Merck will inherit Schering-Plough's overseas rights to nearly $2 billion-a-year Remicade and newer arthritis drug golimumab.
Analysts expressed surprise at Merck's confidence it will not have to hand back the arthritis drug rights to Johnson & Johnson under a change of control clause.
Merck, which structured its takeover as a reverse merger that analysts said may give it some leverage to protect the arthritis drugs, said it had not discussed the matter with J&J and that the high-stakes issue would be settled by binding arbitration if J&J throws up a roadblock.
"It is theoretically possible that J&J comes in and bids for Schering-Plough, because the fit between Schering-Plough and J&J would be a good one," said Sanford Bernstein analyst Tim Anderson.
J&J officials declined to comment.
The deal is composed of $9.8 billion in cash, $8.5 billion in financing provided by JPMorgan Chase & Co and $22.8 billion in Merck stock.
Merck Chief Executive Richard Clark, who investors initially considered a caretaker CEO when he took the helm in 2005, will lead the combined company, with Merck shareholders owning a 68 percent stake.
Schering-Plough CEO Fred Hassan, who turned around Pharmacia Corp before selling it to Pfizer Inc, said his plans after the Schering-Plough deal is completed are unclear.
Merck, which vowed to maintain its dividend, expects the deal to close in the fourth quarter and add modestly to operating earnings in the first full year following completion and "significantly" after that.
The combined 2008 revenue of the two companies totaled $47 billion and Merck believes it will maintain its current credit ratings.
Bernstein's Anderson cautioned that such a big company, with combined revenues close to Pfizer's, could have a much harder time delivering earnings growth.
J.P. Morgan acted as financial adviser and Fried, Frank, Harris, Shriver & Jacobson LLP acted as legal adviser to Merck. Goldman, Sachs and Morgan Stanley acted as financial advisers and Wachtell, Lipton, Rosen & Katz acted as legal adviser to Schering-Plough.
(Reporting by Edward Tobin, Ransdell Pierson and Walden Siew in New York and Ben Hirschler in London, Sam Cage in Zurich; Editing by Lisa Von Ahn, Andre Grenon, Richard Chang)
© Thomson Reuters 2009 All rights reserved
Mon Mar 9, 2009. NEW YORK (Reuters) - Merck & Co Inc said on Monday it would acquire Schering-Plough Corp for $41.1 billion, uniting the makers of cholesterol drugs Zetia and Vytorin in the second megadeal for big pharma in weeks.
The deal between the New Jersey drugmakers comes amid a harsher climate for pharmaceutical companies, as they have failed to produce enough new drugs to replace old ones, and as the new Obama Administration prepares healthcare reforms that could pressure drug prices.
And it landed the same day Roche Holding AG moved closer to its long sought-after purchase of the remaining stake in Genentech Inc that it doesn't already own, with a source telling Reuters the two sides are discussing a deal for about $46.7 billion.
Schering-Plough's earnings and share price have deteriorated over the past year due to a plunge in sales of Vytorin and Zetia, its biggest products, even as several of its most promising drugs move into very costly late-stage trials.
Merck, which has seen profits and shares battered by Vytorin's decline and other setbacks, has deeper pockets and would help fund research on Schering-Plough products, including promising blood clot and hepatitis C drugs.
"The deal gives Merck more breathing room," said Mehta Partners analyst Viren Mehta, as it girds for patent expirations in 2012 on its $4-billion-a-year Singulair asthma drug and by next year for its Cozaar blood-pressure treatment.
The deal, which many analysts have forecast for years given the Vytorin partnership between Merck and Schering-Plough, follows Pfizer Inc's $68 billion planned purchase of Wyeth. Sanford Bernstein analyst Tim Anderson said it was surprising that Wyeth and Schering-Plough agreed to sell, given their depressed stocks and their robust long-term outlooks.
"What could this imply about how pharma company management teams view the future of the industry?" Anderson said.
The transaction offers a premium of 34 percent for Schering-Plough shareholders based on Friday's closing price and will generate savings of $3.5 billion annually after 2011.
Merck and Schering-Plough, which announced significant job cuts last fall, said about 15 percent of their combined workforce would be eliminated under the deal, with most job cuts to take place outside the United States.
"It seems somewhat inevitable," analyst Jeffrey Holford of Jefferies in London said of the deal, referring to an industry coping with generic rivals as cost cuts have run their course.
"The industry needs to shrink because there is just not the same market for branded pharmaceuticals going forward as there has been over the last 10 years. There is overcapacity and (Merck and Schering-Plough) need to take each other's capacity out of the market."
It will also double the number of experimental medicines Merck has in late-stage development to 18 and diversify Merck's lineup of medicines to include cardiovascular, respiratory, oncology, neuroscience and infectious disease.
Schering-Plough shareholders will receive 0.5767 shares of Merck and $10.50 in cash for each of their shares, valuing each share of Schering-Plough at $23.61.
Schering-Plough investors have reason to feel short-changed, said Caris & Co analyst David Moskowitz.
"I think it should be at least $12 billion to $15 billion higher," he said. "I don't think investors will be happy until the price comes up to the high-$20's or $30 (per share)."
Schering-Plough shares rose 14 percent to $20.25 before the market opened, and was up $2.52, or 14.3 percent, at $20.15 late Monday afternoon. Merck hit a 14-year low of $20.10, before trading down 7.8 percent at $20.96.
Merck's 4.75 percent notes due in 2015 traded weaker, with spreads widening to 149 basis points over Treasuries, yielding 4.4 percent. On March 4, in their last notable trade, the spread was 124 basis points with a yield of 4.2 percent, according MarketAxess data.
ARTHRITIS DRUG RIGHTS IN QUESTION
A big question is whether Merck will inherit Schering-Plough's overseas rights to nearly $2 billion-a-year Remicade and newer arthritis drug golimumab.
Analysts expressed surprise at Merck's confidence it will not have to hand back the arthritis drug rights to Johnson & Johnson under a change of control clause.
Merck, which structured its takeover as a reverse merger that analysts said may give it some leverage to protect the arthritis drugs, said it had not discussed the matter with J&J and that the high-stakes issue would be settled by binding arbitration if J&J throws up a roadblock.
"It is theoretically possible that J&J comes in and bids for Schering-Plough, because the fit between Schering-Plough and J&J would be a good one," said Sanford Bernstein analyst Tim Anderson.
J&J officials declined to comment.
The deal is composed of $9.8 billion in cash, $8.5 billion in financing provided by JPMorgan Chase & Co and $22.8 billion in Merck stock.
Merck Chief Executive Richard Clark, who investors initially considered a caretaker CEO when he took the helm in 2005, will lead the combined company, with Merck shareholders owning a 68 percent stake.
Schering-Plough CEO Fred Hassan, who turned around Pharmacia Corp before selling it to Pfizer Inc, said his plans after the Schering-Plough deal is completed are unclear.
Merck, which vowed to maintain its dividend, expects the deal to close in the fourth quarter and add modestly to operating earnings in the first full year following completion and "significantly" after that.
The combined 2008 revenue of the two companies totaled $47 billion and Merck believes it will maintain its current credit ratings.
Bernstein's Anderson cautioned that such a big company, with combined revenues close to Pfizer's, could have a much harder time delivering earnings growth.
J.P. Morgan acted as financial adviser and Fried, Frank, Harris, Shriver & Jacobson LLP acted as legal adviser to Merck. Goldman, Sachs and Morgan Stanley acted as financial advisers and Wachtell, Lipton, Rosen & Katz acted as legal adviser to Schering-Plough.
(Reporting by Edward Tobin, Ransdell Pierson and Walden Siew in New York and Ben Hirschler in London, Sam Cage in Zurich; Editing by Lisa Von Ahn, Andre Grenon, Richard Chang)
© Thomson Reuters 2009 All rights reserved
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