Merck KGaA mulls splitting into three companies

German diversified conglomerate Merck KGaA is mulling shifting its chemicals, healthcare and biotech supplies operations into separate entities next year so that the three business units could be better managed.

The company plans to re-launch its enterprise resource planning systems, which has been primarily optimised for the requirements at headquarters at Darmstadt site but only support global needs of the business sectors to a limited extent.

Its three enterprise resource planning systems will be set up for the three business sectors - Healthcare, Life Science and Performance Materials.

''Darmstadt is a strong site with strong prospects. Our Group headquarters are and will remain in Darmstadt. We manufacture here for all three business sectors. Important research activities are based in Darmstadt and we meanwhile have more than 10,000 employees at the site,'' said Stefan Oschmann, chairman and CEO of Merck.

''Now, in a situation in which Merck is doing very well, we want to strategically prepare the site for further growth in the three business sectors. To do so, we must link it better with other parts of the advancing Merck world,'' he added.

Merck said that the aim of this shift is to be able to benefit in the best possible way from the global growth opportunities of the three business sectors over the long term.

Founded by Friedrich Jacob Merck in 1668, Merck is the world's oldest operating chemical and pharmaceutical company, as well as one of the world's largest pharmaceutical companies.

About the two Mercks
According to Bloomberg (A Tale of Two Mercks), the Merck Group includes around 250 companies in 180 countries. The current main parent company of the group is named Merck KGaA, and is itself owned by the former main parent company, E. Merck oHG, which now operates as a holding company. The company, which generated sales of €15 billion last year, is 70.3 per cent held by the Merck family.

The American pharmaceutical company Merck & Co. was established as a subsidiary of Merck in 1891. "The two Mercks started as one company, with its roots in Friedrich Jacob Merck's acquisition, in 1668, of a pharmacy in Darmstadt. The German company set up a subsidiary in the US in 1891; the US company was expropriated in World War I and became independent," the Bloomberg report said.

"Each owns rights to the Merck trademark in different geographical areas, with the US company using MSD or Merck, Sharpe & Dohme outside the U.S. and Canada."

"The US Merck is much bigger, with $44 billion in sales last year and a market value of $160.4 billion, compared with an estimated 11.1 billion euros ($15.1 billion) in revenue for Merck and a 25.7-billion-euro market value," it addded.

In 2015 Merck adopted a new uniform brand identity for all its subsidiaries, and the company has stressed its intention to protect the brand of "the real Merck" globally and initiated litigation against its former subsidiary over use of the name.