Merck KGaA pays out $17 billion for Sigma-Aldrich
pharmafile | September 22, 2014 | News story | Manufacturing and Production, Sales and Marketing | Millipore, Serono, Sigma-Aldrich, buyout, marck kgaa, sigma aldrich
Merck KGaA has swooped in and bought US-based Sigma-Aldrich in a deal worth $17 billion (€13.1 billion).
The acquisition will help shore up Merck’s Millipore lab supplies business, as Missouri-based Sigma-Aldrich is the world’s largest supplier of biochemicals and organic chemicals to research laboratories.
The company saw sales of $2.7 billion last year and was attractive enough to see Merck acquire all its shares for $140 apiece in cash today.
That represents a 37% premium over the latest closing price of $102.37 on 19 September, according to the firm.
Merck, who’s main pharma product is the oncology drug Erbitux for colorectal and head and neck cancers, expects to achieve annual synergies of around €260 million ($334 million), which it says should be fully realised within three years after the deal has been closed.
“This transaction marks a milestone on our transformation journey aimed at turning our three businesses into sustainable growth platforms”, says Karl-Ludwig Kley, chairman of Merck’s executive board.
“For our life science business it’s even more than that: it’s a quantum leap [sic]. In one of the world’s key industries two companies that fit perfectly together have found each other to present a much broader product offering to our global customers in research, pharma and biopharma manufacturing and diagnostic and testing labs.”
Rakesh Sachdev, president and chief executive of Sigma-Aldrich, adds: “We are excited to join forces with Merck, a distinguished industry leader. We believe this is a very positive outcome for our shareholders, who will receive a significant premium, and our employees, who will benefit from enhanced opportunities as part of a larger, more global organisation.”
The deal is the biggest in the privately-held German firm’s history. Previously, its largest was the takeover of Swiss biotech Serono for €10.3 billion, which has now become its pharmaceutical division.
Merck make laboratory equipment a core element of its business when it purchased US group Millipore for $6 billion four years ago – and has validated its diversified business strategy with today’s announcement.
Ben Adams
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