Equity
The Merck certificate of incorporation authorizes 6,500,000,000 shares of common stock and 20,000,000 shares of preferred stock.
Capital Stock
A summary of common stock and treasury stock transactions (shares in millions) is as follows:
|
| | | | | | | | | | | | | | | | | |
| 2013 | | 2012 | | 2011 |
| Common Stock | | Treasury Stock | | Common Stock | | Treasury Stock | | Common Stock | | Treasury Stock |
Balance January 1 | 3,577 |
| | 550 |
| | 3,577 |
| | 536 |
| | 3,577 |
| | 495 |
|
Purchases of treasury stock (1) | — |
| | 139 |
| | — |
| | 62 |
| | — |
| | 58 |
|
Issuances (2) | — |
| | (39 | ) | | — |
| | (48 | ) | | — |
| | (17 | ) |
Balance December 31 | 3,577 |
| | 650 |
| | 3,577 |
| | 550 |
| | 3,577 |
| | 536 |
|
| |
(1) | Purchases of treasury stock in 2013 include 105 million shares purchased pursuant to an accelerated share repurchase agreement as discussed below. |
| |
(2) | Issuances primarily reflect activity under share-based compensation plans. |
On May 20, 2013, Merck entered into an accelerated share repurchase (“ASR”) agreement with Goldman, Sachs & Co. (“Goldman Sachs”). Under the ASR, Merck agreed to purchase $5.0 billion of Merck’s common stock, in total, with an initial delivery of approximately 99.5 million shares of Merck’s common stock, based on current market price, made by Goldman Sachs to Merck, and payment of $5.0 billion made by Merck to Goldman Sachs, on May 21, 2013. Upon settlement of the ASR on October 31, 2013, Merck received an additional 5.5 million shares as determined by the average daily volume weighted-average price of Merck’s common stock during the term of the ASR program bringing the total shares received by Merck under this program to 105 million. The ASR was entered into pursuant to a share repurchase program announced on May 1, 2013.
Noncontrolling Interests
In connection with the 1998 restructuring of AMI, Merck assumed $2.4 billion par value preferred stock with a dividend rate of 5% per annum, which is carried by KBI and included in Noncontrolling interests. If AstraZeneca exercises its option to acquire Merck’s interest in AZLP (see Note 8) this preferred stock obligation will be retired.
