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Merck KGaA to buy Sigma-Aldrich for $17 billion

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September 22
8:39 AM 2014

Drugs and chemicals maker Merck KGaA (MRCG.DE) said it agreed to acquire Sigma-Aldrich (SIAL.O) for $17 billion in cash to boost its Merck Millipore lab supplies business in the biggest takeover in the German group's history, lifting its shares.

The deal, approved by Sigma-Aldrich's management, will see Merck acquire all shares for $140 apiece in cash.

That represents a 37 percent premium over the latest closing price of $102.37 on Sept. 19 and a 36 percent premium to the one-month average closing price, according to Merck.

Family-controlled Merck said on Monday the deal would immediately top up adjusted earnings per share and the margin of earnings before interest, taxes, depreciation and amortization (EBITDA) over sales.

Merck expects to achieve annual synergies of approximately 260 million euros ($334 million), which should be fully realized within three years after closing.

Shares in Merck, which initially turned negative on the news, traded up 5.8 percent at 73.66 euros by 6:39 a.m. EDT, against a flat European chemicals index .SX4P.

St Louis, Missouri-based Sigma-Aldrich, which says it is the world's largest supplier of biochemicals and organic chemicals to research laboratories, had 2013 sales of $2.7 billion.

Merck, the largest maker of liquid crystals for TV and computer screens, made lab equipment a major pillar of its business when it purchased U.S. group Millipore for $6 billion in 2010.

Previously, its biggest deal was the takeover of Swiss biotech company Serono, a maker of fertility treatments, for 10.3 billion euros.

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