Merck MRK known as MSD outside the United States and Canada, announced today that
it has reached an agreement in principle with plaintiffs to resolve two
federal securities class-action lawsuits. The suits are pending in the U.S.
District Court for the District of New Jersey against Merck, Schering-Plough
Corporation and certain of their current and former officers and directors.
Under the proposed agreement, which will have no impact on Merck's 2013
results of operations, the company will pay $215 million to resolve the
securities class action against all of the Merck defendants and $473 million
to resolve the securities class action against all of the Schering-Plough
defendants. In connection with the settlement, Merck recorded a pre-tax and
after-tax charge of $493 million, which reflects anticipated insurance
recoveries. This charge reduced the company's previously reported
fourth-quarter 2012 GAAP (generally accepted accounting principles) EPS
(earnings per share) results from $0.46 to $0.30 per share and full-year 2012
GAAP results from $2.16 to $2.00 per share, but did not change its previously
reported non-GAAP results.
The plaintiffs are investors who purchased certain securities issued by Merck
and Schering-Plough between December 2006 and March 2008 and claim that they
lost money when the results of the ENHANCE trial were published in early 2008.
Merck continues to believe that both companies acted responsibly in connection
with the ENHANCE study, and this agreement contains no admission of liability
or wrongdoing. The agreement is subject to court approval.
“This agreement avoids the uncertainties of a jury trial and will resolve all
of the remaining litigation in connection with the ENHANCE study,” said Bruce
N. Kuhlik, executive vice president and general counsel of Merck. “We believe
it is in the best interests of the company and its shareholders to put this
matter behind us, and to continue our focus on scientific innovations that
improve health worldwide.”
Judge Dennis M. Cavanaugh is presiding over the cases. Merck is represented by
Theodore V. Wells, Jr. and Daniel J. Kramer of Paul, Weiss, Rifkind, Wharton &
Garrison LLP.
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