Merck KGaA announces acquisition of Serono

Merck KGaA has purchased majority stake shares in Swiss biotechnology firm Serono SA.

Subject to antitrust review and closing of the purchase, Merck holds 64.5% of the capital of Serono and 75.5% of the voting rights, for which Merck agreed to pay CHF 1,100 per share in cash. Merck will make a public tender offer under Swiss law for the same price of CHF 1,100 per share. The offer price represents a 20% premium to the share price as of September 20, 2006, and a total equity value of CHF 16.6bn (approximately Euro 10.6bn) on a fully diluted basis.

'This acquisition transforms Merck's Pharmaceuticals business and creates a leading position in the world of biologic medicines, which helps to ensure its future through the 21st century,' said Michael Roemer, chairman of the executive board of Merck KGaA.

'Both companies have a unique opportunity to achieve a competitive advantage through a combined €1bn r&d budget and a stronger product portfolio,' Roemer added.

Ernesto Bertarelli, of the Bertarelli family who own Serono, said: 'With this transaction we create a combined business with strong capabilities, especially in neurology and oncology. This match will allow Serono's innovative biotech abilities to play an important role in the future of the combined company while expanding its global reach.'

Merck's Pharma Ethicals division will be combined with Serono to create Merck-Serono Biopharmaceuticals.. The headquarters of this business will be in Geneva, Switzerland, and its US headquarters will be in Boston, MA.

Based on 2005 figures, the new Merck Group would have pro-forma sales of €7.7bn, including €3.6bn in biopharmaceutical sales. The Merck Group will have a total number of about 35,000 employees following the acquisition.