Merck acquires Millipore for $7.2 billion

Merck, the German pharmaceuticals and chemicals company, has agreed to buy the Massachusetts-based laboratory supplies maker Millipore for $7.2 billion including net debt.  Merck's offer, which will be financed through available cash and a loan, tops a reported $6 billion approach from Thermo Fisher, a rival laboratory equipment maker also based in Massachusetts. Millipore, which is headquartered in Billerica, makes filters and purifiers for laboratory water and other materials used in the manufacture of biotechnology drugs. It has a market capitalization of over $5 billion, with net income for the fourth quarter of last year of $44 million, compared with $31.1 million for the same period a year ago. Darmstadt, Germany-based Merck makes the cancer drug Erbitux and a multiple sclerosis treatment called Rebif, as well as producing liquid crystal displays (LCDs) for televisions and computer monitors. Currently, MerckÔÇÖs chemicals business generates around 25 percent of its total revenue; however, following the transaction, the chemicals business will contribute 35 percent of sales. Merck hopes the move will also help it to expand its presence beyond drugs and chemicals and into the life science sector with a partnership worth around $2.7 billion. The German company last week reported 2009 earnings of $498.7 million, a figure which is virtually the same as in 2008ÔÇöthough revenue rose two per cent to $10.63 billion. Millipore has about 6,000 employees across more than 30 countries. Merck said it will keep the company's headquarters in Billerica and combine it with Merck's US chemicals headquarters, retaining Millipore's senior management. Merck anticipates the transaction will create savings of $100 million in the three years following the close of the deal. ÔÇ£This transaction is very attractive to shareholders, customers and employees of both companies,ÔÇØ said Karl-Ludwig Kley, chairman of MerckÔÇÖs executive board. ÔÇ£This is a combination with an excellent strategic fit, which will allow us to cover the entire value chain for our pharma and biopharma customers, offering in entire value chain for our pharma and biopharma customers, offering integrated solutions beyond chemicals.ÔÇØ The move continues the consolidation trend within the global pharmaceuticals sector, as companies seek new routes to replace falling revenue thanks to heightened competition from generic drug makers. Last year, New York-based Pfizer purchased its rival, New Jersey-based Wyeth for $68 billion; while Illinois-based Abbott Laboratories bought Belgian Solvay's pharmaceuticals business for $6.5 billion. The transactions resulted in Merck and GermanyÔÇÖs Bayer remaining as the two last large-scale conglomerates producing pharmaceuticals, chemicals and other non-health-related activities.