Sonofi-Merck (MRK) Deal Positive
Analysts at Barclays Capital maintain their "overweight" rating on Merck & Co (NYSE: MRK). The target price for MRK is set to $43.
MRK and Sanofi have announced the creation of an animal health JV through the merger of their Intervet and Merial businesses. Both companies will have equal stake in the JV. According to Barclays Capital, “This was largely in line with our expectations and we view this announcement as a positive for Merck. The combination will have a leading position in the animal health business with more than $5B in sales in the $19B animal health market. The combined company will have to divest certain assets to get regulatory clearances.”
Merck reminded the market of its decision to sell its 50% interest in Merial to Sanofi in July last year to get the regulatory clearances for the merger with Schering Plough. “We view this deal as a positive, as it would result in a market leading company and significant opportunities for cost rationalization in the business,” Barclays Capital added.
