Vioxx recall makes Merck a takeover target

The headlines have been there for weeks. "Will Merck survive Vioxx recall?" It seems that Merck management has now admitted that the media is right.

In a filing with the Securities & Exchange Commission (SEC), the company has hatched up a plan that protects its seniormost executives in case the company files for bankruptcy or is dissolved or is acquired by another company. Merck says, "The Board of Directors of the Company recognizes that the possibility of a Change in Control exists and that the threat or the occurrence of a Change in Control can result in significant distractions of its key executive personnel because of the uncertainties inherent in such a situation." Reading between the lines, it is pretty obvious that the company is talking about serious threats to existence of the company due to recall of Vioxx and the lawsuits that are mounting by the day.

Participants in this plan include approximately 230 members of the Company's Management Committee and other Vice President-level managers. Or in other words, no matter what happens to low-level employees, senior managers will walk away with enough money for retirement while the lawsuits make their way through the court system for years/decades. If mesothelioma cases are any indication, then Merck is definitely getting ready to prepare for the day when it wouldn't exist as we knew it in September. We should also soon expect that Merck scientists and employees will start fleeing the company before it gets uglier.

Related article: Vioxx related lawsuits filed against Merck