Johnson & Johnson tries to cancel distribution agreement with Schering

By Lisa Kerner

Charlotte, N.C., May 28 - Johnson & Johnson began arbitration proceedings in a bid to terminate the distribution agreement related to Schering-Plough Corp.'s rights to Remicade and Simponi.

The proceedings are in connection with the proposed merger of pharmaceutical giants Schering-Plough and Merck & Co., Inc.

Schering-Plough and Merck said they are confident that the merger does not give Johnson & Johnson the right to terminate the distribution agreement.

The arbitration process is expected to take place over the next nine to 12 months.

Schering-Plough and Merck continue to expect their merger to be completed in the fourth quarter without regard to the arbitration.

In March, Merck announced it would acquire Kenilworth, N.J.-based Schering-Plough in a stock-and-cash transaction valued at $41.1 billion, or approximately $23.61 per share.

As previously reported, Schering-Plough shareholders will receive 0.5767 shares of Merck and $10.50 in cash for each share of Schering-Plough. Each Merck share will automatically become a share of the combined company.

Merck is based in Whitehouse Station, N.J.

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