As of the close of business on November 3, 2009, Merck & Co., Inc. (NYSE: MRK) and Schering-Plough Corporation (NYSE: SGP) completed their merger. Each share of SGP received $10.50 in cash and 0.5767 shares of a new company [MRK]. This is not a typical merger, and should not be entered as such. Rather, it is a redemption of 42.33% of the SGP shares for the total amount of 10.50 x the total number of shares of SGP and a merger of 57.67% of the SGP shares for MRK shares, on a one to one basis. You can read about this on the Merck website at

 

If you are an account_sync customer and your broker transactions are automatically recorded, this transaction will be entered for you. If not, here is the way that it should be entered.

 

I will summarize the example given in the above discussion. Assume you owned 100 shares of SGP for which you paid $20 a share. In the merger, you received cash in the amount of $1050.00 [10.50 x 100]. You enter that amount as a sale of  42.33 shares of SGP. The accounting program will figure your cost of that sale at $846.60 [42.33 shares at $20].

 

Next, enter a merger of your remaining 57.67 SGP shares for 57.67 shares of MRK. If you received cash in lieu of fractional shares of MRK, enter that amount on the merger form.

 

That should conclude the entries for this reorganization if you originally owned SGP shares. If you owned MRK shares, it will not be necessary to make any entries to record this reorganization.

 

If you have any questions about this, please email support@bivio.com.

 

Rip West
bivio Inc.