Merck KGaA has come up with its long-awaited buyout deal, acquiring the life sciences services outfit Sigma-Aldrich for $17 billion.
The German Merck is paying $140 a share for Sigma-Aldrich, a 37% premium over its Friday close. In exchange its EMD Millipore group will add a large global outfit with a host of academic and industry lab clients for its research products, including reagents and chemicals. The production end of Sigma-Aldrich will also beef up Merck KGaA's manufacturing services side.
St. Louis-based Sigma-Aldrich has been steadily building up operations in the U.S.. Europe and Canada. Last fall the company added manufacturing capability for antibody-drug conjugates and struck a production deal on pharma ingredients for NSAIDs in Korea late in 2012. In their statement today, Merck KGaA trumpeted a good fit with the new acquisition, saying it plans to keep a sizable presence in St. Louis.
The deal adds to the services side of Merck KGaA, which has long promised to pull off some big deals in an attempt to correct its course, but it does nothing for its struggling R&D operations. The Darmstadt-based biopharma company recently wrote off its late-stage cancer vaccine tecemotide, leaving it with a lean pipeline and a long record of setbacks in the clinic.
But Merck KGaA clearly feels comfortable in services, happy to be positioning itself more strongly for lab support and manufacturing on a worldwide basis.
Karl-Ludwig Kley, chairman of Merck KGaA, qualified the move as 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. 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.
- here's the release (PDF)