MSD Oss (Organon) seems to be caught in a web. Takeovers fail presumably due to interference Board of Directors of Merck USA

Caught in a Web
Removed from the world
Hanging on by a thread
Spinning the lies
devised in my head

Caught in a web – Dream Theater

(All company information originating from Dutch Wikpedia) 

Organon (MSD Oss) is a Dutch pharmaceutical company founded in 1923. The company became well-known as one of the first companies worldwide to produce insuline for diabetes patients on an industrial scale. Other popular products were the contraceptive pill and the pregnancy test. Nowadays MSD Organon has more than 14,000 employees in 15 countries.

The company was a subsidiary of Akzo Nobel, until it was sold to Schering-Plough in 2007 for 11 billion Euro. As in 2009 Schering-Plough merged with Merck & Co, Organon is now part of Merck, Sharp & Dome (MSD).

In 2010 MSD planned to dismiss 2,175 employees in Oss, The Netherlands. The R&D department in Oss where 1,100 people worked would be transfered to the USA . Only a production facility for women’s medication would remain in Oss. This would be a heavy blow for the Oss region in The Netherlands, as Organon is a very important employer there. On August 1, 2010 both the supervisory board and the employees council voted against the closure of the R&D department and other parts of the factory. This was considered not to be in the best interest of the company. After the supervisory board and the employees council brought the issue to court, MSD agreed to discuss it and look for a solution behind closed doors. At the same time a taskforce started a feasibility study for a Life Sciences Park in Oss.

Last week a kind of soap opera arose around MSD Organon: first MSD published a communiqué that they were not able to find a suitable party to take over Organon from MSD.

Then people around Organon responded that the talks with two interested parties for taking over Organon were torpedoed by the Board of Directors of Merck USA. Now interest groups within Organon (trade unions, employee council and supervisory board) are threatening Merck USA with legal action when talks with one of the interested parties are not resumed.

According to the chairman of the supervisory board of Organon (Financieel Dagblad; link in Dutch), Nicole van Straten:

“We are upset and disappointed that the deal has been torpedoed by the Board of Directors of Merck USA. There was a possible agreement that would do justice to the interests of all parties: the workers and the selling and purchasing parties. The arrangements in the agreement met with all demands of Merck itself. We are very disappointed and upset that the talks with the purchasing party have stalled now. 

This agreement would have preserved important knowledge of the pharmaceutical area for The Netherlands and would have preserved substantial employment for MSD Oss. The company would have had a future. It would have been a fair deal for both parties involved in the takeover. Now much employment might be lost, which is not good for MSD Oss and the whole region.

If the deal around MSD Oss blows skyhigh the 2,175 jobs that would have been lost in the original plans might be at stake anyway. Merck is planning the creation of a small center of excellence in exchange for the loss of the R&D department for Oss, but this is merely a token.

Summarizing you can say that MSD Organon is caught in a web and doesn’t know how to get out. You can look at the situation around MSD Organon in two ways:

-   The leftist way: “Now you see what happens when “The Netherlands ltd” is selling its crown jewels for a bargain price to foreign companies. R&D, knowledge and employment disappear faster than a snowball in hell”

-   The rightwing way: “This is the free market. You win some, you lose some. Sh*t happens, so dry your tears and move on”.

As I try to look at things in an independent way, I must be factual:

-   Organon was quite succesful in what they did, but the company was considered to be outside the core activities of Akzo Nobel. That is a defensible proposition.

-   After the takeover of Organon by Merck I suspected it was particularly a takeover to wipe out the competion:

o  Take out the most succesfull pharmaceuticals, the patents, the company intelligence and the good parts of Organon

o  Send the rest to the scrapheap

o  Before I get involved in a lawsuit: this is my private opinion and it is one I can’t prove.

-   The chances that legal actions against Merck will deliver the right result are very small. Even if the judges are symphatetic towards the demands of the Organon people, you still can’t force Merck USA to sell MSD Organon to a competitor if they don’t want to.

-   And the chance that the mentioned interested party is still interested after a robust legal fight is also quite small; nobody wants damaged goods and nobody wants to be in the newspapers if they can avoid it.
 

-   Therefore this could easily become a battle with only losers.

I know one thing: if I was an employee of the R&D department of MSD Organon, I would be looking for a new job.

Ernst