Merck to buy Sigma-Aldrich for US$17bn

Expands Merck Millipore’s global reach, increases presence in North America and adds exposure to fast-growing Asian markets

All smiles: (left to right) Rakesh Sachdev, CEO of Sigma-Aldrich shakes hands on the deal with Karl-Ludwig Kley, Chairman of Merck

Merck is to buy Sigma-Aldrich for US$17bn (€13.1bn), establishing one of the leading players in the $130bn global life science industry.

Merck will acquire the St Louis, MO, US-based company for $140 per share in cash. The agreed price represents a 37% premium over the latest closing price of $102.37 on 19 September.

The company expects to achieve annual synergies of approximately $340m, which it says should be fully realised within three years after the deal closes.

'This transaction marks a milestone on our transformation journey aimed at turning our three businesses into sustainable growth platforms,' said 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. 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.'

This transaction marks a milestone on our transformation journey aimed at turning our three businesses into sustainable growth platforms

He added that combining the two companies would secure 'stable growth and profitability in an industry that is driven by trends such as the globalisation of research and manufacturing' and gives Merck the 'possibility to invest even more in innovation going forward'.

Rakesh Sachdev, President and Chief Executive Officer of Sigma-Aldrich, said: 'The combined company will deliver a broader, complementary range of products and capabilities, greater investment in breakthrough innovations, enhanced customer service, and a leading e-commerce and distribution platform in the industry.'

He added that the deal is 'a clear validation of our success in transforming Sigma-Aldrich into a customer-focused and solutions-oriented global organisation.'

The combined company will offer a set of established brands and an efficient supply chain that can support the delivery of more than 300,000 products, the companies said.

In the laboratory & academia business, the combined company will offer a complementary range of products across laboratory chemicals, biologics and reagents. In pharma and biopharma production, Sigma-Aldrich will complement Merck Millipore’s products and capabilities with additions along the entire value chain of drug production and validation.

Merck plans to maintain a significant presence in St Louis and in Billerica in the US following completion, as well as in important Merck Millipore sites in Darmstadt, Germany and Molsheim, France.

Merck has integrated a number of life science businesses in recent years and says it intends to apply the same principles to the acquisition of Sigma-Aldrich. An integration team, including representatives from both companies, will be established to oversee the integration process.

Based on results from 2013, the business would have combined sales of $6.1bn, an increase of 79%, and combined EBITDA (earnings before interest, taxes, depreciation and amortisation before one-time items) of $2bn (+139%).

The transaction has been unanimously approved by the Board of Directors of each company.

The deal is expected to close in the middle of 2015, subject to regulatory approvals and other customary closing conditions.

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