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Mar 1, 2010

Merck KGaA to Dole Out $7.2B for Millipore

  • Merck KGaA has decided to take over Millipore for approximately €5.3 billion (about $7.2 billion). The deal bolsters Merck’s position in biotech-research equipment and bioproduction.

    Merck is offering to pay $107 per share in cash, a 13% premium over Millipore’s closing price on Friday, February 25, of $94.53. Millipore’s value spiked during afternoon trading on February 22 amid rumors that Thermo Fisher Scientific was bidding $6 billion for the firm. The company went from trading at around $71 to reach a high of $100.32.

    Millipore and Merck say that this combination will create a €2.1 billion ($2.9 billion) firm, achieving significant scale in high-margin specialty products with an attractive growth profile.

    Millipore has a strong position in the bioresearch and bioproduction segments, offering a range of products, technologies, and service. In 2009, it generated sales of $1.7 billion. “Over the past five years, we have transformed Millipore into a life science leader by driving innovation, entering new markets, and generating exceptional operational performance,” remarks Martin Madaus, chairman, president, and CEO of Millipore.

    Additionally, Merck expects that combining their R&D capabilities will enable the development of cutting-edge technologies 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,” notes Karl-Ludwig Kley, chairman of the executive board of Merck.

    The transaction will lead to a more balanced business profile for the group. Currently, the chemicals business sector generates around 25% of Merck’s total revenues. Following the transaction, the chemicals business will contribute 35% of total group revenues of € 8.9 billion, driven by its liquid crystals business and the new life science business.

    Merck plans to maintain Millipore’s headquarters in Billerica, MA, and combine it with Merck’s U.S. chemicals headquarters. The combined business is expected to generate annual cost synergies of around $100 million, starting three years from the closing of the transaction.

     



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