Merck to buy life sciences services major Sigma-Aldrich for $17B

Pharma giant Merck is acquiring NASDAQ-listed life sciences services firm Sigma-Aldrich for $17 billion, it said on Monday.

Merck will acquire all of the outstanding shares of Sigma-Aldrich for $140 per share in cash. The agreed price represents a 37 per cent premium and is expected to be immediately accretive to Merck’s EPS and EBITDA margin.

With this acquisition, Merck expects to achieve annual synergies of approximately $340 million, which should be fully realised within three years after closing.

“This transaction marks a milestone on our transformation journey aimed at turning our three businesses into sustainable growth platforms,” said Karl-Ludwig Kley, chairman, Merck’s executive board.

“For our life science business it’s even more than that: it’s a quantum leap,” he added.

Rakesh Sachdev, president and CEO Sigma-Aldrich, said, “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.”

With this deal, in the laboratory & academia business, together Merck Millipore and Sigma-Aldrich will offer their customers a complementary range of products across laboratory chemicals, biologics and reagents. In pharma and biopharma production, Sigma-Aldrich will complement Merck Millipore’s existing products and capabilities with additions along the entire value chain of drug production and validation.

Guggenheim Securities and J.P. Morgan are acting as financial advisers while Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal adviser to Merck. Morgan Stanley & Co. LLC is acting as financial adviser and Sidley Austin LLP is acting as legal adviser to Sigma-Aldrich.

Bridge financing has been secured for the all-cash transaction, and Merck expects the final financing structure will comprise a combination of cash on Merck’s balance sheet, bank loans and bonds. Closing is expected in mid-year 2015, subject to regulatory approvals and other customary closing conditions.

Sigma-Aldrich is a life science and technology company focused on enhancing human health and safety and manufactures and distributes more than 230,000 chemicals, biochemicals and other essential products to more than 1.4 million customers globally in research and applied labs as well as in industrial and commercial markets.

It has three business units - research, applied and SAFC commercial. It operates in 37 countries. It generated sales of $2.7 billion in 2013.

It has manufacturing and distribution facilities in the US, Australia, Brazil, Canada, Germany, India, Ireland, Israel, Japan, Singapore, Switzerland, Taiwan and the UK.

In 2012, the company expanded its distribution centre and opened a new packaging facility at Bangalore in India.

In 2012 it also completed its acquisition of all of the outstanding shares of BioReliance, a provider of global biopharmaceutical testing services. BioReliance provides services that include biologic, specialised toxicology and animal health testing to pharmaceutical, biopharmaceutical, diagnostics and other life science customers worldwide. BioReliance is headquartered in Rockville, Maryland, with additional operations in Glasgow and Stirling, Scotland and sales offices in Tokyo, Japan and Bangalore, India. This deal also expanded Sigma Aldrich's presence in India.

It has six offices in India including its main set-up in Bangalore.

(Edited by Joby Puthuparampil Johnson)

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