Schering-Plough Offers $14 Billion For Organon

Schering-Plough has agreed to acquire Organon BioSciences, the human and animal health care businesses of Akzo Nobel, for $14.4 billion.

The deal, which is expected to close this year, marks important milestones for both Schering-Plough and Akzo. It is the first major acquisition by Schering-Plough since CEO Fred Hassan took the helm in 2003 and began implementing a turnaround program for the troubled drug company.

At the same time, the offer quashes Akzo's plan to spin off Organon as a separate company through a partial stock offering on the Amsterdam Stock Exchange. The Schering-Plough offer exceeds both Akzo's $9 billion estimate of proceeds from a stock market launch and analysts' recent estimates that a buyer might pay about $10 billion for the business (C&EN, March 5, page 37).

Organon BioSciences had 2006 sales of approximately $5 billion, and Schering-Plough's sales were $10.6 billion.

"Organon BioSciences will be an excellent fit with Schering-Plough strategically, scientifically, and financially," Hassan says. "It builds on our growing strength in primary care, giving us immediate access to central nervous system and women's health care products." He adds that Organon will also fill gaps in Schering-Plough's late-stage pipeline by adding five compounds in Phase III development, including drugs for the treatment of schizophrenia, infertility, and neuromuscular blockade induced during surgery.

Akzo Nobel CEO Hans Wijers calls the deal "a fundamental step toward our goal of creating a focused, international industrial player. At the same time, we are convinced that we have found an excellent home for Organon BioSciences." He says the sale of Organon to a major drug company will give more scope to its development than Organon would have had on its own.

The deal is the culmination of an extensive portfolio restructuring conducted over the past two years at Akzo. In the future, the firm's business core will be composed of coatings and chemicals, with no further business in pharmaceuticals.