Pharmabiz
 

German Merck to acquire Millipore for US$ 7.2 bn

Our Bureau, BangaloreTuesday, March 2, 2010, 08:00 Hrs  [IST]

In a major development in the life sciences space, Merck KGaA, a global pharmaceutical and chemical company, is set to acquire US based lab instrumentation major Millipore Corporation for a total consideration for US$ 7.2 billion (€5.3 billion). The transaction was approved by the boards of directors of both companies. Millipore and Merck will create a US$ 2.9 billion (€2.1 billion).world-class partner for the life science sector, achieving significant scale in high-margin speciality products with an attractive growth profile. Merck KGaA will acquire all outstanding shares of common stock of Millipore, for US$ 107 per share in cash. “This transaction is attractive to shareholders, customers and employees of both companies. It is a combination with an excellent strategic fit, which will allow us to cover the entire value chain for our pharma and bio-pharma customers, offering in entire value chain of integrated solutions beyond chemicals,” said Dr Karl-Ludwig Kley, chairman, executive board, Merck KGaA. Millipore has a strong position in the attractive bioresearch and bio-production segments, offering a comprehensive range of products, technologies and services for pharma and biotech companies, as well as for academia, to improve laboratory productivity and to develop and optimize manufacturing processes. In 2009, Millipore generated sales of US$ 1.7 billion, with around 6,000 employees in more than 30 countries. According to Martin Madaus, chairman, president and CEO, Millipore, “Over the past five years, we have transformed the company into a life science leader by driving innovation, entering new markets, and generating exceptional operational performance. The Merck announcement, which is the outcome of a thorough strategic review process, is a validation of the tremendous value of our brand. This is a very positive outcome for our employees and customers as we continue to build on our strategy for growth, while maintaining our headquarters in Billerica.” Together, Millipore and Merck will have a significant presence in high-growth segments and an enhanced geographic presence. Combining the research and development capabilities of both companies will create a powerful innovation platform to develop cutting-edge technologies that are tailored even more closely to the needs of customers. “By combining Millipore’s bioscience and bioprocess knowledge with our own expertise in serving pharma customers, we will be able to unlock value in our chemicals business and transform it into a strong growth driver for Merck,” said Dr Kley. The acquisition is fully in line with Merck’s strategy of focusing on high-margin, specialty products with an attractive growth profile. In addition, the transaction will lead to a more balanced business profile for the Group. Currently, the Chemicals business sector generates around 25 per cent of Merck’s total revenues. Following the transaction, the chemicals business will contribute 35 per cent of total Group revenues of € 8.9 billion (pro forma), driven by its strong Liquid Crystals business and the new world-class life science business. In order to ensure a seamless integration of the two businesses, Merck will apply a “best of both worlds” integration approach across all operating business functions. Merck plans to build on Millipore’s talented workforce and intends to retain its senior management. The company also plans to maintain Millipore’s headquarters in Billerica and combine it with Merck’s U.S. chemicals headquarters. Merck expects that the combined business will generate annual cost synergies of around US$ 100 million (€ 75 million), which Merck expects to realize within three years from the closing of the transaction. The acquisition will be funded through available cash and a term loan provided by Bank of America Merrill Lynch, BNP Paribas and Commerzbank Aktiengesellschaft. Merck plans to replace part of the facility through the issuance of bonds. Merck is committed to retaining a solid investment-grade rating. Completion of the acquisition requires the approval of Millipore shareholders, for which the company will call a special shareholders meeting. Due to the fact that the two businesses are highly complementary, Merck expects that the transaction will clear regulatory review. Further, Merck anticipates that the transaction will be completed in the second half of 2010, at which time all outstanding shares of Millipore common stock will be exchanged for the right to receive the agreed cash payment. Guggenheim Securities, LLC and Perella Weinberg Partners LP have acted as financial advisers to Merck in the transaction. Skadden, Arps, Slate, Meagher & Flom LLP served as the Group’s legal advisor. Goldman Sachs & Co. acted as financial advisor to Millipore, and Cravath, Swaine & Moore LLP and Ropes & Gray LLP acted as Millipore’s legal advisers.

 
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