INDUSTRY NEWS: Drug Companies' Class Action Suit Settled for $0

A U.S. class action lawsuit over the merger of Merck and Schering-Plough has ended with the two drug companies agreeing to settle by paying nothing to the class but $3.5 million in feels to the class counsel.

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DRUG GIANT MERGER CLASS ACTIONS SUIT SETTLED FOR $0


NEW JERSEY – A class action lawsuit over the merger of Merck and Schering-Plough has come to an end with the drug giants agreeing to settle the matter by paying nothing to the class but $3.5 million in fees to the class counsel.

A federal judge approved it nevertheless, finding counsel provided a substantial benefit to the class because the suit, alleging "material deficiencies" in the proxy statement sent to shareholders before the merger vote, triggered the disclosure of additional information. Disposing of objections, U.S. District Judge Dennis Cavanaugh held on March 26 that a common benefit was rendered because "extended disclosures permitting the shareholders to exercise a fully informed decision" would not have occurred but for "Class Counsel's hard fought negotiation with Defense Counsel." Objections to the settlement were lodged by five members out of an estimated class of 450,000 who held Schering common stock, between March 8, 2009, and Nov. 3, 2009, the date the merger was completed. The merger left Schering as the surviving company, renamed as Merck & Co. Schering shareholders received 0.5767 shares of new Merck stock and $10.50 in cash for each share. Those in the original Merck obtained shares in the new entity on a one-to-one basis. In his ruling, Cavanaugh also denied a request by one objector -- Allan Marain, a New Brunswick solo -- for sanctions against class counsel for suing so quickly after the merger was announced that they failed to ascertain if there was a basis for the suit.

SOURCE: Lawday