Merger Mayhem

" Chemical has reached a tentative deal to deplete its fifteen billion dollar buy out of Roman hot this less -- day. Afterward -- drugmaker Merck 41 billion dollar deal to buy rival Schering-Plough. -- Wheeling and dealing may provide a boost of confidence to help. Spark markets and the economy are so we hope markets and -- that yesterday for more I'm joined by David Moskowitz. We -- director for Carrie and company aptly fox form contributor and financial columnist Liz peek. And after Steven Greer founder of the health care account that morning to all three -- as should be here. Article first and foremost data let me start with you you're on remote. How surprised were you by the announced yesterday between Merck and Schering --"

" Actually not very we had figured Schering-Plough for one of the leading takeout candidates in the pharmaceutical industry. A we've had that thesis. Since about the middle of last year major pharmaceutical companies are flush with cash and valuations are down and even down further since the market is. Has melted down so not very surprised Schering has a great asset base. This is a great price of Merck can pull off this merger."

" Email list what does -- say right now about the current climate you know just just several months ago we heard about five or Wyatt. We've known about the Russian and tech news and then coming yesterday in -- Merck Schering-Plough. Does this suggest that. This is one sector that is going to a very healthy merger acquisition process or. That credit is opening up things are resuming to their normal levels but for."

" a lot of things you can say there wasn't much credit used in this deals I'm not sure really says very much about the money available for mergers and acquisitions. The pharma industry is our experts will tell you have certain special reasons why they need to do some deals right now. But I think the same kind of logic could apply to the oil and gas business for example I think we could see some takeovers there. Again is just a matter of you know hyping future earnings taking advantage of current very low stock market valuations."

" Our exit that actor currently overuse here and and talk about this because -- makes a great point. It's a lot of cash involved these deals they've got very strong balance sheets. But there's also financial institutions involved in some of these deals -- the fights -- wife deal. They have received TARP funds and there's some concern. That a deal like that will go through -- some of those TARP financial institutions. Perhaps do not pass such a stress test is do not lucrative. How did that impact this deal --"

" Well and it's actually at the FTC level -- might not be approved we just had a fascinating interview last night with. A senior person I think he FTC that would -- trade we guess that would give the yen a year in aid to the to the Pfizer -- deal. And I can briefly go over that if you like -- first is that newly appointed chairman called it's names Jon Leibowitz he's. Pretty enforcement minded as is the whole nation exited the east they're pretty strict about. Looking for anticompetitive. Activity as opposed to a more lenient agency said that rumor is true. And I asked about these TARP funds and whether that fall strictly under their main date of the Clayton act or the heart to god -- rodino act. And they said it doesn't but the fact that. TARP funds are being used to do the deal that and and a deal that will cut US jobs as it is potentially 20000 jobs particularly -- day it did doesn't look right in -- going to raise the profile and scrutiny of the entire deal and then I asked whether. The cuts in research and development. To the combined -- Wyeth. Would be something that falls under the anti competitive considerations -- it absolutely does so what they're going to be doing is looking at whether the new combined fires -- Wyeth would be. Detrimental to research and development with it certainly will be. So might take away was that. This deal is being looked at carefully. I don't want to see it won't happen but it's it's very controversial than the FTC it would be pretty."

" Horrifying that the government steps in and prevents one of the few things is going on that really would be very bullish on the stock market right now and for the banking sector. They want to promise for the banks right now obviously is that they haven't been doing many deals. So if they want them to start you know build rebuilding their revenue base this is a pretty good place to start and with. I mean I I just think that would be an unbelievable decision yeah."

" Point and David let me bring you back into this conversation because it leads in the case of the Merck Schering-Plough deal yesterday. There's only one major financial institution involved and that happens to be JPMorgan. What many people. Suggest it the healthiest of all of those financial institutions. So do you think in some regard speaking to doctor gray -- point. That perhaps Merck and Schering-Plough perhaps Merck and meticulous and you know what it wouldn't do this deal and this is a potential. Danger zone here let's do what with one financial institution as opposed to for so that we know looking at the deal not."

" I think the most important thing when you're considering. Federal Trade Commission FTC action. Is the overlaps between the business because the word was used anti competitive. And I can tell you that -- in the Schering-Plough deal and the Wyeth Pfizer deal of the very few overlaps so we are very confident that these deals pass muster. As. Your other guest had just said it would be very scary if found the government steps in and determines how TARP money is going to be spent. In terms of how the banks are are going to be loaning it out. From my perspective the whole purpose of our money is to get liquidity flowing again in the system so that we can get back to business as usual are close to business as usual. And once again the pharmaceutical industry the two mergers that we've seen in the open more that we expect. We believe we're going to have very little overlap and and past."

" Us companies that hasn't sent doctor let me ask you get there -- 1 this morning that because. There is a partnership right now between Schering-Plough and Johnson & Johnson Johnson & Johnson on -- on the specific arthritis drug. That they get this reverse merger to protect against Johnson & Johnson getting involved with this 1 this morning that Johnson & Johnson may actually be able pay. 10% more. For Schering plan out what complication here what happens in their analysts were suggesting that I should say that right I doubt."

" Changing it would buy Schering-Plough you never know open ended -- not a good fit they went by just for a McCain with just a drug has not been around for long time in. It's they're better drugs on the market like yeah I don't think Jane Jesus would want the entire Schering-Plough. In May make some sort of deal to get the rights for McCain. The reverse merger was a bit of sleep -- I'm sure we'll see it in the courts challenged in the courts because. -- supposed to take the writes if there's a change of control of sheer well so that they'll be something that find out the court. I want to mention mister Moskowitz -- comments that. It's not just about when it comes that the anti competitiveness is not just about whether drugs overlap it's this research and development aspect that definitely falls under the mandate of the FTC -- we -- last night. So that's the angle and not be going after. Our side isn't isn't one of the reasons they're doing -- deal like this because they have these enormous strides for the off patent in 201112. Industry is just looking at a huge sucking out of profitability. And one way to stem that. Decline in profits -- to to generate these cost savings -- That's it you know I think that the industry is really Arabian I had bad shape that they don't let these companies -- and of these deals gave."

" Can it last -- go ahead on that."

" Sure that's exactly right the public in the government wanted cheaper drugs faster than they accelerated the approval. The review process for generic drugs and now we've got we wanted and what's going to suffer is investment in R&D that's exactly the cycle we've asked for."

" All right well David Lynch and active prayer thank you all three preparedness activated its complicated so many deals in one sector -- good -- good thing at the end of the day hopefully I."