<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 19, 1998
MERCK & CO., Inc.
(Exact name of Registrant as specified in its charter)
New Jersey
(State or other jurisdiction of incorporation)
1-3305 22-1109110
(Commission File Number) (I.R.S Employer Identification No.)
One Merck Drive, PO Box 100, Whitehouse Station, NJ 08889-0100
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (908)423-1000
<PAGE> 2
Item 5. Other Events
Incorporated by reference is a press release issued by the Registrant on June
19, 1998, attached as Exhibit 99, concerning the Registrant's announcement that
it has signed a definitive agreement with Astra AB under which their 50-50 joint
venture, Astra Merck, Inc., will be restructured.
Item 7. Financial Statements and Exhibits
(c) Exhibits
Exhibit 99 Press release issued Filed with
June 19, 1998 this document
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
MERCK & CO., Inc.
Date: June 24, 1998 By: /s/ Nancy V. Van Allen
----------------------
NANCY V. VAN ALLEN
Assistant Secretary
<PAGE> 3
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
99 Press release issued June 19, 1998
</TABLE>
<PAGE> 1
Exhibit 99
ASTRA AND MERCK RESTRUCTURE ASTRA MERCK RELATIONSHIP
-- New Entity, Astra Pharmaceuticals, to Combine
Operations of Astra Merck and Astra USA --
-- Astra to Assume Management Control of Astra Pharmaceuticals --
-- Astra Expects Combination to Generate Significant Synergies --
-- Merck to Participate in Astra Pharmaceuticals' Growth --
-- Agreement Accretive to Merck Immediately; to Astra After Two Years --
-- Astra Acquires Right to Buy Out Merck's Interest in 2008 at Earliest --
NEW YORK, JUNE 19, 1998 -- Astra AB (NYSE: A) and Merck & Co., Inc. (NYSE: MRK)
announced today they have signed a definitive agreement under which their 50-50
joint venture, Astra Merck, Inc., will be restructured and Astra Merck's
business will be combined with Astra's wholly owned subsidiary, Astra USA Inc.,
in a new U.S. limited partnership, named Astra Pharmaceuticals LP, over which
Astra will have management control as the general partner.
Astra expects that the combination of Astra Merck and Astra USA and the
resultant opportunities to market products of both entities more effectively,
will create revenue synergies. While Astra anticipates no reduction in the field
sales forces, it does expect that Astra Pharmaceuticals will benefit from cost
savings in other areas of about $100 million annually by 2000. Astra expects the
restructuring of the relationship with Merck to be accretive to Astra Group net
earnings from 2000 after a modest initial dilution.
Merck expects that from the outset the new agreement will yield more revenue and
income to Merck than the company would have received under the existing joint
venture agreement. Under the new agreement, Merck will receive financial
consideration in three ways: First, Merck will receive ongoing revenue and
income for at least 10 years based on sales of current and pipeline Astra Merck
products and certain Astra USA products. Second, Astra will have the right to
buy out Merck's interest in these products in 2008, 2012 or 2016, except that
Merck's interest in the gastrointestinal medicines Prilosec and perprazole will
continue until 2017, if their combined sales stay above a specified level. The
cash buyout will be based on a multiple of the prior three-year average of
pre-tax income received by Merck for all products except Prilosec and
perprazole, but will be no less than $4.4 billion in 2008. Third, in order to
facilitate the restructuring, Astra will loan Merck $1.4 billion in cash at
closing.
<PAGE> 2
In addition, if Astra merges with or is acquired by another company, Merck will
continue to receive ongoing revenue and income from sales of then current and
pipeline products, but Merck's right to revenue and income from compounds
subsequently discovered or acquired will terminate and Merck will receive a
payment of $675 million to $1.5 billion. In this event, Merck could require
Astra, in 2008, to purchase Merck's interest in sales of then current and
pipeline products (except Prilosec and perprazole), but the minimum received by
Merck will be higher than it would have been had Astra not merged or been
acquired.
The newly-formed entity, Astra Pharmaceuticals, will have headquarters in Wayne,
PA, with production and development facilities in Westborough, MA. Astra
Pharmaceuticals will be fully consolidated into Astra Group's financials. On a
pro forma basis, Astra Pharmaceuticals had 1997 sales of approximately $2.7
billion, which represents approximately 40 percent of Astra Group sales, and
3,800 employees. Carl-Gustaf Johansson will be President and CEO of Astra
Pharmaceuticals. Mr. Johansson is an Executive Vice President and member of
executive management of Astra Group. He will retain those responsibilities.
"This transaction establishes a new and more dynamic presence for Astra in the
United States," said Hakan Mogren, Astra President and CEO. "The strength of our
product portfolio and our R&D pipeline will be complemented and enhanced by the
efficiency and critical mass resulting from the creation of Astra
Pharmaceuticals. Astra today embarks on the next stage in our growth and
development. We now have the strategic freedom to best serve the interests of
our shareholders by charting our own course in the global pharmaceutical
market."
Raymond V. Gilmartin, Merck Chairman and CEO said: "The new arrangement offers
multiple benefits to Merck in terms of our long-term growth objectives. Merck's
share in the profitability of the current and pipeline Astra Merck products,
including Prilosec, will be undiminished and Merck will gain additional income
from certain Astra USA. products. Moreover, Merck will receive full value for
its interest in Astra's pipeline should Astra merge or be acquired or should
Astra exercise its option to buy out Merck's interest in 2008 or beyond. All in
all, this is a very advantageous agreement for Merck shareholders at this
juncture."
Judy C. Lewent, Merck Senior Vice President and CFO said: "Over the years, the
Astra Merck joint venture has contributed to Merck's growth. We are pleased
that, through this new agreement, Merck will participate in the future growth of
Astra Pharmaceuticals."
- 2 -
<PAGE> 3
"The exceptional growth of Astra Merck and Astra USA has come as a result of the
dedication of employees at both companies. Based on the portfolio of current
products from both Astra Merck and Astra USA and the pipeline of planned
introductions over the coming years, we believe Astra Pharmaceuticals will be
able to offer our employees exciting and challenging career opportunities," Mr.
Mogren concluded.
Astra and Merck began their collaboration in 1982 and commenced their 50-50
joint venture, Astra Merck in 1994. Astra Merck markets certain Astra products
in the U.S., including Prilosec, the best-selling prescription medication in the
world. Astra Merck, which had 1997 sales of $2.3 billion, has 2,200 employees,
including a 1,500-person sales force. Astra USA established in 1947 and located
in Westborough, MA, is a leading marketer of hospital products in the U.S.,
including Xylocaine, a leading local anesthetic. Astra USA which had 1997 sales
of $400 million, has approximately 1,600 employees, including a 700-person sales
force. In recent years, the company has successfully introduced several products
in the U.S. market, including Toprol-XL, a beta-blocker, and is at present
introducing Pulmicort Turbuhaler, the biggest-selling anti-asthma agent in
Europe.
Astra and Merck anticipate no impediments to closing the agreement as of July 1,
1998, and will work together to effect an orderly transfer to Astra's control.
No Hart Scott Rodino anti-trust filing is required for this transaction.
Astra is an international pharmaceutical company, based in Sweden, with
operations in some 45 countries. The company, a leader in the development of
gastrointestinal, cardiovascular, respiratory and pain control products with
1997 revenues of $5.9 billion, has been one of the fastest-growing
pharmaceutical companies over the past decade.
Merck is a global, research-driven pharmaceutical company that discovers,
develops, manufactures and markets a broad range of human and animal health
products, directly and through its joint-ventures, and provides pharmaceutical
benefit services through Merck-Medco Managed Care.
THIS PRESS RELEASE CONTAINS "FORWARD-LOOKING STATEMENTS," AS THAT TERM IS
DEFINED IN THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
THE FORWARD-LOOKING STATEMENTS BY MERCK ARE RELATED TO EXPECTATIONS OF THE
EFFECT ON MERCK'S REVENUE AND INCOME AS A RESULT OF THE NEW AGREEMENT. NO
FORWARD-LOOKING STATEMENT CAN BE GUARANTEED AND ACTUAL RESULTS MAY DIFFER.
ADDITIONAL, DETAILED INFORMATION CONCERNING A NUMBER OF FACTORS THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY IS SET FORTH IN MERCK'S FORM 10-K (UNDER
"CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS") FOR THE FISCAL YEAR WHICH
ENDED
- 3 -
<PAGE> 4
DECEMBER 31, 1997. COPIES OF MERCK'S FORM 10-K ARE AVAILABLE ON REQUEST TO
MERCK'S OFFICE OF STOCKHOLDER SERVICES.
THE FORWARD-LOOKING STATEMENTS BY ASTRA ARE RELATED TO PROJECTIONS ABOUT
OPERATING AND FINANCIAL RESULTS AS A RESULT OF THE NEW AGREEMENT. NO
FORWARD-LOOKING STATEMENTS CAN BE GUARANTEED AND ACTUAL RESULTS MAY DIFFER
MATERIALLY FROM THOSE INDICATED AS A RESULT OF VARIOUS IMPORTANT FACTORS.
ADDITIONAL, DETAILED INFORMATION CONCERNING CERTAIN SUCH FACTORS AND OTHER RISKS
ARE SET FORTH IN ASTRA'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION,
INCLUDING ITS ANNUAL REPORT ON FORM 20-F FOR THE FISCAL YEAR ENDED DECEMBER 31,
1997. A COPY OF ASTRA'S FORM 20-F IS AVAILABLE UPON REQUEST TO ASTRA'S OFFICE OF
INVESTOR RELATIONS.
# # #
Note to Editors: Prilosec, Toprol-XL, Xylocaine and Pulmicort
Turbuhaler are registered trademarks.
Contacts:
Astra AB Merck & Co., Inc.
- -------- -----------------
Staffan Ternby (Press) John Doorley (Press)
Tel. 46 8 553 261 07 Tel. 1-908-423-4081
Michael Olsson (Investor Relations) Laura Jordan (Investor Relations)
Tel. 46 8 553 259 52 Tel. 1-908-423-5185
Jorgen Winroth (Investor Relations U.S.)
Tel. 1-609-896-4148
- 4 -
