Merck to Sell to DuPont Its Half of Pharmaceutical Joint Venture

WILMINGTON, Del. — Merck & Co. said Tuesday that it will sell to DuPont Co. its half of their pharmaceutical joint venture for $2.6 billion because its profit from the business has been disappointing.

DuPont, the nation’s largest chemical company, said it agreed to acquire the rest of the venture as part of its strategy to build up its life sciences operations. It said it will take a charge of about $1 billion in the second or third quarter to write off in-process research and development in the venture.

DuPont Merck Pharmaceutical Co., formed by the two companies in 1991, had revenue of $1.3 billion in 1996 and 1997. Its commercial drugs include the oral anticoagulant Coumadin, Parkinson’s disease treatment Sinemet and ReVia alcoholism treatment.

Merck, one of the world’s biggest drug companies, has been under pressure to step up the pace of its drug innovation as some of its blockbuster products are about to lose their patents.

DuPont earlier this month said it was shedding its Conoco Inc. oil unit to focus on its more profitable drugs and agriculture businesses.

“For Merck, this was a small business, but for DuPont it’s a significant coup,” said Christopher Crooks, an analyst at Janney Montgomery Scott who has a “buy” rating on DuPont. “It gives them control of this business completely.”

DuPont said the acquisition will trim a few cents off earnings per share this year and next. Shares of the Wilmington-based chemicals maker rose $1.44 to close at $82.19; Merck shares fell 75 cents to close at $118.88. Both trade on the New York Stock Exchange.

Whitehouse Station, N.J.-based Merck said it will record an unspecified one-time gain from the sale in the third quarter.

The sale is expected to be completed in July. The 4,200 DuPont Merck employees will be transferred to DuPont.