The $7.2 billion, including net debt deal, will give Merck a huge presence in products for the biotechnology industry as it looks to build its lab equipment business.
Darmstadt-based Merck beat rival bidder Thermo Fischer Scientific Inc (TMO.N) to bag Billerica, Massachusetts-based Millipore. Thermo Fisher had offered to buy Millipore for $6 billion.
Merck will acquire Millipore for $107 per share in cash, which represents a 13 percent premium over Friday's closing price for Millipore shares.
Strategic deal
Merck said that the acquisition of Millipore would catapult it into being a mammoth supplier of equipment and substances used in research in the life science sector.
The combined entity is likely to generate annual sales of $2.7 billion. Millipore, which has 6,000 employees in more than 30 countries, recorded sales of $1.7 billion last year.
The deal is also likely to create about $100 million worth of annual cost savings for the acquirer.
“This transaction is very attractive to shareholders, customers and employees of both companies. 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 integrated solutions beyond chemicals,” said Karl-Ludwig Kley, Merck’s chairman.
Quick clearance expected
The transaction is likely to clear regulatory review and consummate in the second half of 2010.
"Due to the fact that the two businesses are highly complementary, Merck expects that the transaction will clear regulatory review," Merck said in a statement.
Guggenheim Securities, Perella Weinberg Partners, and the law firm Skadden, Arps, Slate, Meagher & Flom advised Merck on the deal, while Goldman Sachs and the law firms Cravath, Swaine & Moore and Ropes & Gray were advisors to Millipore.
The deal would be funded by Bank of America Merrill Lynch, BNP Paribas, and Commerzbank. In addition to the bank loans, Merck intends to finance the deal partially through the issuance of bonds.
About Merck
Family-controlled Merck was founded in 1668. Today, it is one of the oldest still-operating chemical and pharmaceutical companies in the world.
Although a small player in the biotech-research equipment market, Merck is the world's largest maker of liquid crystals for flat-panel displays.
Multiple sclerosis drug Rebif and cancer drug Erbitux contribute significantly towards the company’s revenue
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