Definitive agreements between Merck KGaA and Sigma-Aldrich signal new era in pharmacology, research and biotechnology.
Merck KGaA and Sigma-Aldrich has announced that the companies have entered into a definitive agreement. Merck KGaA, Darmstadt, Germany, will acquire Sigma-Aldrich for $17.0 billion (€13.1 billion). This amazing acquisition will establish one of the leading players in the $130 billion global life science industry.
Under this acquisition, Merck KGaA, Darmstadt, Germany, will acquire all of the outstanding shares of Sigma-Aldrich for $140 per share in cash. $17.0 billion represents a 37% premium to the latest closing price of $102.37 on September 19, 2014, and a 36% premium to the one-month average closing price. This purchase will immediately increase Merck KGaA, Darmstadt, Germany’s EPS pre and EBITDA margin. Merck KGaA, Darmstadt, Germany, expects to achieve annual synergies of approximately €260 million.
Karl-Ludwig Kley, Chairman of Merck KGaA, Darmstadt, Germany’s Executive Board mentioned in an exclusive interview that “This transaction marks a milestone on our transformation journey aimed at turning our three businesses into sustainable growth platform.” He added “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 bio pharma manufacturing and diagnostic and testing labs. As such, the combination of Merck KGaA, Darmstadt, Germany, and Sigma-Aldrich will secure stable growth and profitability in an industry that is driven by trends such as the globalization of research and manufacturing. What’s more, the combination gives us the possibility to invest even more in innovation going forward. We are delighted to make this compelling proposition to Sigma-Aldrich’s shareholders, who will obtain full and certain cash value for their shares.”
On the other hand, Rakesh Sachdev, President and Chief Executive Officer of Sigma-Aldrich also mentioned in an exclusive interview “We are excited to join forces with Merck KGaA, Darmstadt, Germany, a distinguished industry leader. The combined company will be well-positioned to deliver significant customer benefits, including 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. This transaction is a clear validation of our success in transforming Sigma-Aldrich into a customer-focused and solutions-oriented global organization. This is a testament to the strength of the Sigma-Aldrich brand and the accomplishments of our 9,000 employees worldwide. 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 organization.”
The transaction will produce a company that will be able to serve life science customers around the world using an attractive set of established brands and an efficient supply chain that can support the production and the delivery of more than 300,000 products.
The combined life science business will certainly enjoy solid growth potential, strong and sustainable cash flow, and meaningful efficiency potential on an operational level. According to fiscal year 2013 financials, the business would have had combined sales of €4.7 billion ($6.1 billion), this is an increase of 79% and combined EBITDA pre of €1.5 billion ($2.0 billion). Merck KGaA, Darmstadt, Germany, Group’s sales would have increased by approximately 19%.
Bridge financing has been secured for the all-cash transaction. The final financing structure will comprise a combination of cash on Merck KGaA, Darmstadt, Germany’s balance sheet, bank loans and bonds. Closing is expected in mid-year 2015 and is subject to regulatory approvals and other customary closing conditions.
About Merck KGaA
Merck KGaA is a German chemical and pharmaceutical company. Merck, also known as “German Merck” and “Merck Darmstadt”, was founded in Darmstadt, Germany, in 1668. It is the world’s oldest operating chemical and pharmaceutical company. Merck KGaA operates mainly in Europe, Africa, Asia, Oceania and Latin America. Since Merck & Co. holds the rights to the Merck name in the U.S. and Canada, the company operated under the umbrella brand EMD Chemicals in North America and since 2010 as EMD Millipore. Merck KGaA stock market evolution: http://www.marketwatch.com/investing/stock/mrk
About Karl-Ludwig Kley
Mr. Karl-Ludwig Kley was born on June 11, 1951 in Munich, Germany, has been Chairman of the Executive Board of Merck since April 2007. Before joining Merck, Karl-Ludwig Kley was a member of the Executive Board of Deutsche Lufthansa AG from 1998 to 2006. There he served as Chief Financial Officer.
About Sigma-Aldrich
Sigma-Aldrich Corporation is an American life science and high technology company. It has over 9,600 employees and operates in 40 countries. The company has chemical and biochemical products and kits that are used in scientific research, biotechnology, pharmaceutical development. Sigma – Aldrich stock market evolution: http://www.marketwatch.com/investing/stock/sial
About Rakesh Sachdev
Mr. Rakesh Sachdev has been the Chief Executive Officer and President of Sigma-Aldrich Corporation since November 2010. He is a Graduate of the Indian Institute of Technology in New Delhi, India, with a Bachelor’s Degree in Mechanical Engineering. He has a Master’s Degree in Business Administration in Finance from Indiana University, and a Master’s Degree in Mechanical Engineering from the University of Illinois.
