Merck is issuing new stock because, technically, Schering is engulfing Merck, even though actually it's the other way around. As Schering is technically subsuming Merck's shares, new stock must be issued -- thus the fee -- even though the surviving entity is called "Merck," continues to trade under MRK and will be run by Merck's management.
To give you an idea of the ridiculous contortions Merck's lawyers have had to go through to achieve this, consider this explanation the company offered to the SEC of the so-called reverse-merger:
On November 3, 2009, Merck completed its previously announced transactions with Schering-Plough Corporation (the "Parent") pursuant to the Agreement and Plan of Merger, dated as of March 8, 2009, as amended, by and among Merck, Parent, SP Merger Subsidiary One, Inc., and SP Merger Subsidiary Two, Inc. (the "Transactions").
In the Transactions, Merck merged into a subsidiary of Parent, Parent changed its name to Merck & Co., Inc. and Merck changed its name to Merck Sharp and Dohme Corp.If you read that carefully, you'll notice that the company formerly known as Merck is now "Merck Sharp and Dohme Corp.," and the company formerly known as Schering-Plough is now Merck. Merck's lawyers put the companies through three name changes to transform "Merck" into, er ... Merck.
Merck's lawyers did a better job of describing it in this SEC document:
In the Transactions, Old Merck was merged into a subsidiary of Schering-Plough, Schering-Plough changed its name to Merck & Co., Inc. and Old Merck changed its name to Merck Sharp & Dohme Corp.Why is Merck bothering? Because it must demonstrate that Schering has not had a "change of control" in order to keep its revenues from Remicade in a joint venture with Johnson & Johnson (JNJ). The terms of the deal give J&J the full rights to Remicade if such a change takes place.
J&J is insisting in arbitration that a change of control has happened, as, obviously, Merck is firmly in control of the merger. J&J's lawyers may want to introduce evidence of "Parent," "SP Merger Subsidiary One, Inc.," "SP Merger Subsidiary Two," and "Merck Sharp & Dohme Corp." in order to demonstrate that this is basically shenanigans and not a substantive change of control.
Hat-tip to Shearlings Got Plowed re the $20 fee.