UPDATE 1-J&J plans to arbitrate Remicade pact

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PHILADELPHIA, May 20 (Reuters) - Schering-Plough Corp SGP.N said on Wednesday that Johnson & Johnson (JNJ.N) plans to go to arbitration over their Remicade drug partnership in the wake of Schering-Plough's planned merger with Merck & Co Inc (MRK.N).

In a filing with the U.S. Securities and Exchange Commission, Schering-Plough said Johnson & Johnson notified it on May 5 that it planned to arbitrate whether it had the right to terminate the Remicade arthritis distribution agreement due to the planned merger.

Schering-Plough years ago acquired the rights to Remicade and golimumab from diversified healthcare company Johnson & Johnson, which sells Remicade in the United States. Golimumab is awaiting approval in Europe.

Because Merck's acquisition of Schering-Plough is structured as a so-called "reverse merger," Merck has said the Remicade partnership would be unchanged. If Schering-Plough had faced a change-of-control, however, provisions in the licensing deal would prevent Merck from taking over overseas rights.

Merck has previously said Schering-Plough's rights to Remicade and golimumab would not be affected by the merger.

Johnson & Johnson did not immediately return calls seeking comment. (Reporting by Jessica Hall) (For more M&A news and our DealZone blog, go to here)