The boards of directors at Merck and Schering-Plough have unanimously approved a definitive agreement under which Merck and Schering-Plough will merge in a $41.1 billion stock and cash transaction.

Under the terms of the agreement, the Kenilworth, N.J.-based Schering-Plough shareholders will receive cash for each of their shares. Each Merck share will automatically become a share of the new company, which Merck Chairman, President and CEO Richard T. Clark will lead.

Upon closing of the transaction, the Whitehouse Station, N.J.-based Merck shareholders are expected to own approximately 68 percent of the combined company, and Schering-Plough shareholders are expected to own approximately 32 percent. The combined firm will be under the name Merck.

The companies said that the "transaction reinforces Merck's 50-year commitment to the cardiovascular therapeutic area." The consolidation of the cholesterol drugs Zetia (ezetimibe) and Vytorin (ezetimibe/simvastatin) into Merck's cardiovascular portfolio will streamline the combined company's approach to the cardiovascular market and create new opportunities to leverage the cholesterol franchise through new medicine combinations, Merk and Schering-Plough said.

Also, Merck said that the addition of Schering-Plough's Thrombin Receptor Antagonist, a potential antiplatelet therapy, among other late-stage development candidates, further complements its Phase III cardiovascular development portfolio and will position the combined company to continue offering products for patients in this therapeutic area.

Merck said it expects to achieve cost savings of approximately $3.5 billion annually beyond 2011. "These cost savings are expected to come from all areas across the combined company and from the full integration of the Merck/Schering-Plough Pharmaceuticals cholesterol joint venture," Merck said. The companies said that the "cost savings are in addition to the previously announced ongoing cost reduction initiatives at both Merck and Schering-Plough.

Following the close of the transaction, the board of directors of the combined company will be comprised of the Merck board and three representatives from Schering-Plough. Fred Hassan, chairman and CEO of Schering-Plough, will continue to lead the operations at Schering-Plough and "intends to participate in the integration planning until the close."