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Merck to buy Serono for $13 billion

Published on 22/09/06 at 10:59am

German pharma company Merck is to acquire Serono for $13.5 billion, creating one of Europes largest bio-pharmaceutical technology companies.

The new company will be known as Merck-Serono Biopharmaceuticals, with its headquarters in Geneva, Switzerland.

Merck lost out to Bayer earlier this year in a bid to acquire fellow German pharma company Schering, and the Serono merger will satisfy an internal demand for faster expansion and greater scale.

The immediate market response to the deal was not positive, however  Merck shares fell as much as 6% following the news. Merck will finance the transaction through existing cash and bridging loans.

The deal also brings to an end Seronos intense search for a buyer.

In November last year, it was revealed that chief executive Ernesto Bertarelli had hired investment bank Goldman Sachs to explore a merger or acquisition of the company, which was facing tough competition to its flagship product, multiple sclerosis treatment Rebif.

Negotiations with GlaxoSmithKline, Novartis and Pfizer fell through when none of the companies was willing to match the price Bertarelli was seeking of around $12 billion.  

Merck has agreed a deal with the Bertarelli family  which owns the majority stake of Serono  for $13.5 billion. It will buy the billionaire Bertarelli familys 64.5% stake of Serono and plans to offer 1,100 Swiss francs for each remaining Serono share.

Michael Roemer, chairman of the board at Merck KGaA said the acquisition would transform Mercks pharma business and give it a leading position in the world of biological medicines.

He added: The two companies are a perfect fit with 28 compounds in development. Together with Serono management and employees, we will create a world-class bio-pharmaceutical company with a global footprint, cutting-edge biotechnology manufacturing and strong growth.

The Merck family, which owns around 73% of the company, will contribute up to one billion euros to the acquisition.

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