Drugmakers Merck & Co. and AstraZeneca PLC have amended their U.S. partnership to give AstraZeneca a 2014 buyout option that could cost more than $400 million.

The companies said that London-based AstraZeneca will have an option to purchase Merck’s remaining interest in AstraZeneca’s heartburn drug Nexium and its older product Prilosec for $327 million. It also will pay an additional amount based on Merck’s profit from the partnership in the three years before the option is exercised.

AstraZeneca, which could have ended the agreement this year, estimates that the additional payment will total about $80 million.

Merck, based in Whitehouse Station, N.J., said the partnership will contribute about 3 cents to 5 cents per share to its earnings this year and about $200 million in revenue.

Last year, Merck earned a total of $6.27 billion, or $2.02 per share, on $48.05 billion in revenue.

The deal between the companies dates back to the 1980s and started as an agreement to develop and sell the British drugmaker’s products. It was restructured in 1998 to form a U.S. limited partnership.

 

Date: June 27, 2012
Source: Associated Press