Germany's Merck KGaA Agrees to Buy Sigma-Aldrich for $17 Billion

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Researched by Industrial Info Resources (Sugar Land, Texas)--Pharmaceuticals titan Merck KGaA (NYSE:MRK) (Darmstadt, Germany) announced an agreement to buy the chemical company Sigma-Aldrich Corporation (NASDAQ:SIAL) (St. Louis, Missouri) for $17 billion. According to the agreement, Merck offered $140 per share, or a 37% premium over September 19 closing price. The company says it expects the deal with close in the middle of next year.

With acquisition, Merck KGaA will expand in the U.S. pharmaceutical sector. According to 2013 financial results, Merck KGaA got 58% of its revenue from pharmaceuticals last year, while chemicals accounted for 39%. The company's chemicals include liquid crystals used in flat-screen televisions.

"What this deal does, it puts two companies together that have complementary product offering and the reach overlaps," Merck KGaA CEO Karl-Ludwig Kley said. "And that brings something that's better for the customer, and to brings additional value for the customer."

Sigma-Aldrich generated $2.7 billion in revenue in 2013 by selling chemical and biochemical products and services to laboratories. Sigma-Aldrich CEO Rakesh Sachdev said the deal was very a positive one for shareholders and for his more than 9,000 employees.

"If you look at the benefits of a combination like this and how they can enhance the value proposition for the customers," Sachdev said in a statement. "And really that's the thesis, because if strategically you cannot enhance the value of the customers, you shouldn't do the deal."

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