Merck to Pay $688 Million to Settle Investor Lawsuits
Feb 14th 2013 3:47PM
Updated Feb 14th 2013 4:25PM
In a press release issued today, Merck announced it has reached an agreement in principle with plaintiffs in two class action lawsuits brought by investors, both related to the release of results from Merck's ENHANCE study in 2008.
The legal actions were brought by shareholders who had purchased either Merck or Schering-Plough stock between December 2006 and March 2008. The two companies merged in 2009.
The lawsuits allege that investors lost money when Merck announced unfavorable results of its much-anticipated ENHANCE study. In a statement, Merck said it "continues to believe that both companies acted responsibly in connection with the ENHANCE study, and this agreement contains no admission of liability or wrongdoing."
The agreement -- which needs court approval -- would resolve the two federal securities class action lawsuits currently pending in the U.S. District Court for the District of New Jersey. Under the arrangement, Merck will pay $215 million to resolve the lawsuit brought against Merck defendants and $473 million to bring an end to proceedings against Schering-Plough defendants.
Merck had previously taken a one-time, $493 million charge related to the legal actions. As a result, Merck does not expect the settlement to impact 2013 operations results. However, the charge reduced the company's previously reported fourth-quarter 2012 GAAP EPS results from $0.46 to $0.30 per share, according to the company.
Merck executive vice president and general counsel Bruce Kuhlik was quoted in the company press release as saying, "This agreement avoids the uncertainties of a jury trial and will resolve all of the remaining litigation in connection with the ENHANCE study."
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