Merck KGaA’s $17 billion acquisition of Sigma-Aldrich is expected to close November 18, finalizing a transaction announced last September (see IBO 9/30/14) and creating the world’s second-largest manufacturer and distributor of laboratory products as well as a major presence in the bioprocess market.

Although pending for over a year, customer awareness of the acquisition is surprisingly low, according to an online survey conducted by BioInformatics LLC of laboratory personnel who are current customers of either both companies or Sigma alone (see page 4). Although some customers view the transaction as a positive development for their laboratories, especially as it broadens product availability, the majority of survey respondents are concerned about possible changes in ordering, service and support, and pricing.

Only 49% of respondents who are customers for both companies were even aware of the acquisition. The extended time period in closing the transaction and the ingrained relationships that many labs have with their suppliers of routine lab products, such as Sigma, are factors that may have contributed to the lack of knowledge. In fact, only 42% of Sigma-only customers surveyed were aware of the transaction.

And while a perception of business as usual following an acquisition might be an important factor for customers, especially Sigma-only customers, the survey suggests customers are still focused on possible changes as a result of the transaction. Foremost among these changes that concern respondents is the possible effect on product availability. As Merck/EMD Millipore addresses overlapping product lines and reconfigures business units following the acquisition, product portfolios will likely be affected—an issue to which survey respondents appear particularly attuned.

When asked what they “hope will be the major outcomes of this merger,” 80% of respondents who are customers of both companies and 79% who are Sigma-only customers indicated that they want the products they use to remain available. Asked about what they “hope will be the outcome of this merger [as] most critical” to their research, 30% of customers of both companies and 30% of Sigma-only customers, the highest percentage share for each, chose that the products they use continue to be available, suggesting the importance of optimized products and established workflows to their laboratories.

In fact, the importance of product availability was underscored in another way. Eighty-one percent of customers of both companies hope that a broad portfolio of kits, reagents and consumables will be a major outcome of the merger. At 83%, the percentage among Sigma-only customers was nearly the same.

In this way, customers could seemingly welcome the acquisition. However, product ordering and customer service—integral to daily laboratory operations—are areas that customers want little change. For customers of both companies, 72% indicated they hope one of the major outcomes of the merger will be that customer service/support remains the same or improves. For Sigma-only customers, the percentage was slightly lower at 65%.

Similarly, over 60% of survey respondents hope one of the major outcomes is “ordering will not change (e.g., catalog numbers),” emphasizing once again the integral relationship of lab suppliers to lab operations. For Merck/EMD Millipore and Sigma customers, 68% hope ordering will not change. For Sigma-only customers, 66% hope it would not change.

Although pricing can be a priority for many laboratories, changes in pricing ranked behind service and ordering as an area for which change following the acquisition was a concern. However, for both customer sets, it still ranked over 60%. Sixty-eight percent of customers of both companies hope that the prices of the products they currently use do not change. For Sigma-only customers, 64% hope the prices do not change.

As for the expected outcome of the merger “most critical” to their research, pricing received the second-highest percentage (after product availability), at 19%, for customers of both companies. For Sigma-only customers, a change in price was less of a concern, at 11%, the third-highest percentage. For Sigma-only customers, the second-largest expected outcome of the merger “most critical” to their research, at 25%, is a broad portfolio, a concern that the merger may directly address by adding products.

The survey also addressed the issue of consolidation among laboratory product vendors, asking respondents how the transaction will “affect competition in the life sciences industry.” Answers were given on a scale of 1 to 5, with 1 indicating that it will increase competition, 3 indicating there will be no change, and 1 indicating it will decrease competition.

The results suggested a range of views, reflecting little clear consensus on consolidation and perhaps providing further evidence of the lack of awareness of lab personnel about mergers and acquisitions. The highest percentage belonged to Sigma-only customers, with 35% rating the merger a 2, thus showing little concern about the impact on competition. Perhaps as customers unfamiliar with Merck/EMD Millipore, they do not view the company as a significant supplier for their laboratory and consequently as having little impact. However, a quarter of Sigma-only customers rated it a 4, suggesting concerns about decreasing competition are at least on some customers’ minds. Yet 24% expected no change, perhaps reflecting the relative insulation of these scientists from inter-supplier relationships.

For customers of both companies, for which seemingly the change would not be as impactful, 24% rated it a 2, indicating that the merger of two of their existing suppliers is still viewed as decreasing competition. But nearly the same percentage, 22%, rated it a 4, viewing it as increased competition, while 27% rated it a 3.

Survey Demographics

The online survey was conducted by BioInformatics LLC between October 27 and November 2. Two hundred and twenty-nine of the respondents were customers of both Sigma-Aldrich and Merck/EMD Millipore. Eighty-nine were Sigma-only customers. Job and sector respondent information for each group is shown below.

Regionally, 36%, 34% and 31% of respondents who are customers of both companies are located in Europe, Asia and North America, respectively. For Sigma-only customers, 31%, 33% and 36% are located in Europe, Asia and North America.