Cleveland partners Steve Eisenberg and Rob Weible were quoted in a March 18, 2009, Reuters article, "Outfoxed J&J Could Demand Remicade Reparations."
According to the article, Merck and Co. and Schering-Plough Corp have likely outfoxed Johnson & Johnson by structuring their planned merger in a way that will prevent J&J from taking back overseas rights to a major drug. Under the merger deal, Merck has agreed to pay $41 billion in cash and its stock to Schering-Plough shareholders. Even so, Merck said it is the one being acquired, by smaller Schering-Plough, although the combined company would be called Merck. The "reverse merger" would allow Schering-Plough to claim it is a continuing enterprise, which, under a 1998 licensing contract with J&J, allows Schering-Plough to keep lucrative overseas rights to J&J's Remicade arthritis drug as long as Schering does not undergo a change of control.
However, J&J could threaten to hold up the merger, by attempting to reclaim Schering-Plough's rights through binding arbitration. "Clearly, to preserve the value of the merger and to limit a J&J challenge, whether it has merit or not, deals can be cut to remove this fly in the ointment," said Eisenberg.
Publicity over this case will highlight the importance of contract language that more clearly spells out change-of-control situations, predicted Weible. "There are probably as many definitions of change of control as there are lawyers who write them, so more attention will likely be paid," Weible said.