Merck Agrees To Acquire Millipore for $7.2 billion
Merck Agrees To Acquire Millipore for $7.2 billion
Merck Agrees To Acquire Millipore for $7.2 billion
German drug and chemical conglomerate Merck KGaA said Sunday it has agreed to buy U.S. laboratory and biotech supply company Millipore Corp. in a deal valued at $7.2 billion, including assumption of debt.
The news came days after Millipore, which makes products to help develop and process drugs, said it was evaluating strategic alternatives.The company posted $1.65 billion in revenue last year.
The deal would expand Merck's presence globally, as Millipore, based in Billerica, Mass., does most of its business outside the U.S., including 40% in Europe. It also will help Merck diversify its business away from pharmaceuticals. Days ago, the company, which isn't related to Merck & Co. of the U.S., issued a downbeat 2010 outlook that underscored how the high cost of bringing drugs to market would eat into profits this year.
A news report last week said Thermo Fisher Scientific Inc., a heavyweight in the laboratory-supply sector that analysts said would benefit from adding Millipore, had made an unsolicited $6 billion takeover offer for the company. Thermo Fisher didn't confirm this, and a spokeswoman on Sunday said the company would not comment on the Merck-Millipore deal.
In a statement, Merck said it would pay $107 per share, cash, for each Millipore share. That represents a 13% premium to Millipore's closing price of $94.41 on Friday, and a 50% premium to where Millipore traded a week earlier, before consolidation speculation took hold. At the end of December, Millipore's long-term debt stood at $890.2 million.
Merck expects the combined business to generate annual cost savings of about a €75 million ($100 million) within three years of closing the deal, which the company forecast will happen in the second half of this year. It said it will fund the transaction through available cash and a term loan.
Merck said the two companies would create a €2 billion entity for the life sciences sector.
The deal is in line with Merck's strategy of focusing on "high-margin specialty products with an attractive growth profile," the company said. By tucking Millipore into its chemicals business, that unit will generate 35% of the company's revenue, up from 25% today.
Millipore has two units: one makes products used in life-science research and development, and the other makes products to help process pharmaceutical and biotechnology drugs.
Merck, which posted revenue of €7.7 billion last year, sells drugs for cancer, neurodegenerative diseases, autoimmune diseases and fertility. It also has a consumer health business and a chemicals business that makes products like liquid crystals for televisions, among others.
The deal will allow Merck to "cover the entire value chain for our pharma and biopharma customers, offering integrated solutions beyond chemicals," said Karl-Ludwig Kley, Merck's chairman, in the statement.
Merck said it expects the transaction will gain regulatory approval. The deal requires antitrust clearance along with approval from Millipore shareholders.
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