Merck Updates Sigma-Aldrich Purchase
The transaction is expected to result in €260 million ($333 million = €0.78 = $1) in synergies until 2018, with integration costs of around €400 million ($513 million). To finance the purchase, Merck issued a €1.5 billion ($1.9 million = €0.81 = $1) hybrid bond in December 2014 and a $4 billion US bond in March, the first time the company has issued a US bond. Finally, in August, Merck placed a €2.1 billion ($2.4 million = €0.87 = 1) EU bond. For the first half of the year, net sales for Merck’s Life Science division climbed 14.9%, 4.8% organically, to €1.51 billion ($1.69 billion = €0.89 = $1). Merck’s hedging strategy against the purchase price of Sigma using forward exchange transactions and currency options resulted in cash inflow of €1 billion ($1.1 billion = €0.91 = 1) in the second quarter. First-half revenues for Sigma-Aldrich slipped 1.2% to $1.37 billion but grew roughly 6.5% organically.
Darmstadt, Germany 9/28/15; St. Louis, MO 9/28/15—Merck KGaA has announced that it expects to close its $17 billion acquisition of Sigma-Aldrich (see IBO 9/30/14) within the next two months. Merck had originally expected the transaction to close in the third quarter. “We are diligently working on fulfilling the EU commitments,” commented Bernd Reckmann, member of Merck’s Executive Board and CEO of the Life Science business. “However, due to the complex nature of the business, the process is taking longer than originally expected.” Merck stated that it is in the final stages of negotiations to sell parts of Sigma’s solvents and inorganics business, as required by the European Commission for approval of the acquisition (see IBO 6/15/15). Any buyer of Sigma’s assets requires European Commission approval.
