Merck KGaA Agrees to Acquire Sigma-Aldrich for $17 Billion

In a move to strengthen its life-sciences supply organization, Merck KGaA has agreed to acquire Sigma-Aldrich for $17.0 billion. Under the deal, Merck KGaA, will acquire all of the outstanding shares of Sigma-Aldrich for $140 per share in cash.

The transaction has been unanimously approved by Sigma-Aldrich's board of directors. A merger agreement will be presented to Sigma-Aldrich shareholders for approval at a special meeting of shareholders. The transaction has the full support of Merck KGaA’s executive board and E. Merck KG, including its board of partners, and a Merck KGaA shareholder vote will not be required. Bridge financing has been secured for the all-cash transaction, and Merck KGaA, expects the final financing structure will consists of a combination of cash on Merck KGaA’s balance sheet, bank loans, and bonds. Closing is expected in mid-year 2015, subject to regulatory approvals and other customary closing conditions.

Merck KGaA expects to achieve annual synergies of approximately EUR 260 million ($340 million), which should be fully realized within three years after closing. The combined company will serve the life-science industry with more than 300,000 products, which includes a range of products across laboratory chemicals, biologics, and reagents. In pharma and biopharma production, Sigma-Aldrich will complement EMD Millipore's existing products and capabilities with additions along the value chain of drug production and validation.

Merck KGaA said it plans to maintain a significant presence in St. Louis, Missouri and in Billerica, Massachusetts following completion of the transaction, as well as in important EMD Millipore sites, such as Darmstadt, Germany and Molsheim, France.

Based on fiscal year 2013 financials, the business would have had combined sales of EUR 4.7 billion ($6.1 billion), an increase of 79% and combined EBITDA-pre (earnings before interest, taxes, depreciation and amortization before one-time items) of EUR 1.5 billion ($2.0 billion), which is an increase of 139%. Merck KGaA’s Group's sales would have increased by approximately 19%. For the same period, the acquisition would have increased Merck KGaA’s Group's EBITDA-pre by approximately 24% and improve group EBITDA pre-margin from approximately 30% to approximately 33%, including expected synergies.

Source: Merck KGaA

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