Germany''s Merck acquires Europe''s largest biotech company
By Rajiv Shankar
21 September 2006
It is second time lucky for Merck. German pharmaceutical major Merck KGaA has reached an agreement to buy its rival and Europe's largest biotechnology company, Serono SA, for $13.3 billion. Earlier this year Merck had failed to acquire rival Schering AG.
The Darmstadt-headquartered Merck (no longer affiliated with the American drug maker of the same name) will buy out the Bertarelli family's controlling 64.5-per cent stake in the Swiss company for around $879 a share. It will also announce a public offer for the outstanding shares at the same price, as required by law. The deal gives Merck 75.5 per cent of the voting rights in Serono.
Merck will combine its pharma ethicals division with Serono's to create Merck-Serono Biopharmaceuticals, with headquarters in Geneva, Switzerland and a US headquarters in Boston. The transaction is expected to close in early 2007.
| Merck's history began in 1668. In 1917, its US subsidiary Merck & Co was expropriated and it has been an independent company ever since. |
The deal will create a drug group with a combined market value of around $32 billion, annual sales of almost €8 billion and a research budget of around €1 billion. Merck has said that the deal will enable it to achieve critical mass in R&D.
The deal with Merck represents a dramatic strategic reversal by the Bertarelli family. Late last year, Serono was in the process of seeking an acquirer for itself and had been linked to a possible bid from GlaxoSmithKline.
According to Ernesto Bertarelli, "With this transaction, we create a combined business with strong capabilities, especially in neurology and oncology. Together with Serono, Merck will be a world-class biotechnology company and a major player in the global pharmaceutical market. This match will allow Serono's innovative biotech abilities to play an important role in the future of the combined company while expanding its global reach."
