By Tess Stynes
Merck & Co. (MRK) said AstraZeneca PLC (AZN.LN, AZN) won't exercise its option to acquire Merck's interest in their AstraZeneca L.P. partnership this year, putting any potential move off by two years.
Under the amended agreement, AstraZeneca has a new option to acquire Merck's interest in June 2014, allowing Merck to record supply sales and equity income from the venture this year and next year as it aims to cope with the coming loss of market exclusivity for its blockbuster allergy and asthma drug Singulair.
The amended accord is expected to add roughly three cents to five cents a share to Merck's earnings and about $200 million to revenue this year, though the company said it doesn't change its 2012 guidance.
Chief Financial Officer Peter N. Kellogg said the amended pact provides clarity about the partnership and enhances Merck's ability to drive its performance through the impact of U.S. Singulair patent expiration later this year.
Under the amended pact, the amount AstraZeneca would pay would be based on an agreed-upon value of Merck's interest in heartburn drugs Prilosec and Nexium--set at $327 million--and include a potential amount based on actual sales between any closing in 2014 and June 2018, as well as an exercise price that may factor in part of future sales of arthritis treatment Vimovo in the U.S., among other things.
As a result of declining sales of Nexium and supply of bulk Nexium by third-party suppliers, Merck expects the drugs will make a lower quarterly contribution to earnings next year than during the fourth quarter of 2012.
Merck plans to provide 2013 guidance when it reports its fourth-quarter earnings.
Write to Tess Stynes at Tess.Stynes@dowjones.com