Talks began just 10 days ago. And Fred Hassan is trying to make good on his promises to use select acquistions to build Schering-Plough with this deal, which came as a surprise, given that Akzo recently reaffirmed plans to list up to 30 percent of Organon’s shares in an initial public offering. In fact, Fred has been criticized lately by some Wall Street analysts for not pursuing big game.

Organon, which has US headquarters about 30 minutes from Fred’s office, had sales last year of about $5 billion, of which $3.4 billion were generated by pharmaceuticals. The company is best known for contraceptives, but Fred says he also likes its animal health biz, the biologics unit, which he hopes will propel Schering-Plough into vaccines, and manufacturing capacity.

“It builds on our growing strength in primary care, giving us immediate access to central nervous system and women’s health care products,” Fred says in a statement. “The acquisition …also fills a gap in our late-stage pipeline by adding five compounds in Phase III development and a number of promising projects in Phase II development. And, we believe that the two cultures are very much in tune.”

In a conference call with journalists, Hassan adds that he doesn’t foresee doing another large deal for awhile, and that job losses following this acquisition should be limited.

Barbara Ryan of Deutsche Bank, who tracks Schering-Plough’s stock, writes in an investor note that she’s lukewarm about this: “While we do not view this as a compelling acquisition, either in terms of the in-line portfolio or the pipeline potential, it makes strategic sense in that it does allow the company to further leverage its cost base, build the breath of its product offerings, and reduce its dependence on the cholesterol joint venture” with Merck to sell Vytorin.

Schering-Plough statement;
Akzo Nobel statement;
Reuters;
Bloomberg News;
MarketWatch;

[tags]Birth Control Pills, Fred Hassan, Organon, Schering-Plough[/tags]