Merck will acquire all outstanding shares of Sigma-Aldrich for $140 per share in cash. The agreed price represents a 37% premium to the latest closing price of $102.37 on Sept. 19, and a 36% premium to the one-month average closing price. Merck expects to achieve annual synergies of approximately $340 million, which should be fully realized within three years after closing.
Rakesh Sachdev, president and CEO of 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.”
In the laboratory and academia business, Merck Millipore and Sigma-Aldrich will offer 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.
Merck plans to maintain a significant presence in St. Louis, Mo., and in Billerica, Mass., following completion of the transaction, as well as Merck Millipore sites such as Darmstadt, Germany, and Molsheim, France.
Based on fiscal year 2013 financials, the business would have had combined sales of $6.1 billion, an increase of 79% and combined EBITDA pre (earnings before interest, taxes, depreciation and amortization before one-time items) of $2 billion, which is an increase of 139%. Merck Group’s sales would have increased by approximately 19%. For the same period, the acquisition would have increased Merck Group’s EBITDA pre by approximately 24% and improved Group EBITDA pre margin from approximately 30% to approximately 33% including expected synergies.
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’s executive board. A shareholder vote will not be required. Closing is expected in mid-year 2015, subject to regulatory approvals and other customary closing conditions.