Merck KGaA (Darmstadt, Germany) and Millipore Corp. (Billerica, MA) have entered into a definitive agreement under which Merck will acquire all outstanding shares of common stock of Millipore, for $107 per share in cash, or a total transaction value, including net debt, of approximately $7.2 billion. The transaction was approved by the boards of directors of both companies. Millipore and Merck will create a $ 2.9 billion partner for the life science sector, 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 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 $ 1.7 billion, with around 6,000 employees in more than 30 countries.
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.
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% of Merck’s total revenues. Following the transaction, the chemicals business will contribute 35% of total group revenues of € 8.9 billion (pro forma), driven by its strong liquid crystals business and the new 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 $100 million, which Merck expects to realize within three years from the closing of the transaction.
Completion of the acquisition requires the approval of Millipore shareholders, for which Millipore will call a special shareholders meeting, and the satisfaction of other customary conditions, including antitrust clearance. Due to the fact that the two businesses are highly complementary, Merck expects that the transaction will clear regulatory review. 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.
