In the latest example of drug-industry consolidation, Merck will buy Schering-Plough for $41.1 billion. The deal values Schering at $23.61 a share, a 54% premium over Friday’s stock price. Merck aims to pay with a combination of cash and stock that would leave it owning 68% of Schering. In January, Pfizer agreed to buy Wyeth in another enormous deal, and this could could increase the pressure on other Big Pharma companies to join together.

Investors certainly weren’t enthusiastic: shares of Merck dropped to 14-year lows on the news and were down 8% around 2:30 p.m. The two New Jersey companies hope to capture $3.5 billion in annual cost savings by 2011, and Merck said the company plans to reduce its workforce by 15%. Meanwhile, The Wall Street Journal reported that Genentech’s board is close to approving a buyout offer of $95 a share from Roche. The deal, which has been under discussion since July, would total $46.7 billion and a 6% increase over Roche’s initial offer of $89.50 per share.

Source: CNNMoney.com, Wall Street Journal

A Procter & Gamble Veteran Steps Down

Susan Arnold, president of global business units at P&G, is resigning effective immediately, though she will remain on special assignment for the company until September. Arnold, 55, has been viewed as a contender to succeed 61-year-old CEO A.G. Lafley. Her exit may clear the path for COO Robert McDonald to take over when Lafley turns 65. P&G said of Arnold that it “has long been her intention to step down upon her 55th birthday,” which occurred on Sunday.

Source: Bloomberg

Did Madoff Have Help?

A longtime aide to alleged Ponzi scheme operator Bernard Madoff told two assistants to generate bogus trading tickets that were allegedly used to persuade clients that their investments were earning good returns. Annette Bongiorno, a four-decade veteran of the Madoff firm, told the two to research stock prices and then generate “tickets” to show the purported trades, said someone acquainted with the assistants’ statements.

Source: Wall Street Journal

Obama Will Call for Global Stimulus

U.S. President Barack Obama is expected to urge world leaders to increase emergency government spending to jumpstart the global economy. At an April summit to be held in London, the U.S. will call for the ramp-up in government spending as economic data continues to show the current economic downturn is going from bad to worse. A senior White House official said the domestic $797 billion fiscal stimulus package showed the U.S. was “doing its part.” A coordinated action to address the current crisis was the “first and most important” goal of the summit, he added. It’s not just the States that has plans for a global stimulus package. European Union finance ministers are set to back plans from the International Monetary Fund to double the body’s funds to $500 billion to fight the financial crisis. The announcement also is expected to unveiled when politicians convene in London next month.

Source: Wall Street Journal, Reuters

States Squabble over Stimulus Funds

U.S. states and federal agencies are squabbling over whether the $797 billion stimulus package is being used in ways that violate the letter or spirit of the legislation. The battles raise new questions surrounding the intent of the legislation and threaten to delay the injection of funds into the stumbling economy. The key question is whether the money is meant solely to boost the economy or represents the first step in longer-term reforms.

Source: Washington Post

Japan Records Largest Ever Current Account Deficit

Japan — the world’s second largest economy — suffered its largest ever current account deficit in January in a sign that plunging global demand is taking its toll on the country’s export-dependent economy. Japan’s current account fell into deficit for the first time since 1996 to $1.75 billion.

Source: Financial Times

Strong Dollar Worsening Global Crisis

American investors are bailing out of foreign ventures and bringing their dollars home, entrusting them to the supposed safety of United States government bonds. This is lifting the value of the dollar, but also is exacerbating the economic crisis across the world.

Source: New York Times

Geithner Under Pressure

Since taking over as U.S. Treasury secretary, Timothy Geithner and a skeleton crew of unofficial senior advisers have been racing to make decisions that will shape the future of the banking, insurance, housing, and car industries. Now, however, there are signs that this frantic agenda is getting ahead of him.

Source: New York Times

Congress Criticizes Stimulus Money Spending

U.S. Congressional investigators are criticizing the Obama administration for failing to police deals in which banks participating in the federal bailout lent billions of dollars overseas. The deals include $8 billion of financing for Dubai by Citigroup (recipient of at least $45 billion in bailout funds); $1 billion in investment in India by J.P. Morgan (which got $25 billion from the government rescue); and $7 billion in investment in China by Bank of America (which got $45 billion from the bailout).

Source: Washington Post

Switzerland Rejects U.S. Demands for UBS Data

Switzerland has rejected U.S. demands for UBS, the country’s largest bank, to hand over the data of 52,000 U.S. clients, Swiss newspaper Berner Zeitung quoted the Swiss justice minister as saying. “These are UBS’ client data,” Justice Minister Eveline Widmer-Schlumpf said. “They are requested without substantiated suspicion. This is against our legal norms and it is against the agreements we have with the United States.”

Source: Reuters

IPO Market ‘Dead as a Doornail’

The market for initial public offerings (IPOs) is a “dead as a doornail.” The market is valuing new companies so cheaply that private investors — whether private equity firms or venture capitalists — don’t think IPOs are worth it. Worse still, the dead IPO market hurts the economy by shutting off a key way companies raise money for expansion.

Source: BusinessWeek

Conversation of the Day: Future Car Batteries

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