Merck buying Sigma-Aldrich for $19.6bn

Merck has revealed plans to buy out and merge with Sigma-Aldrich for US$17 billion ($19.59 billion) to create a leader in the life sciences industry.

Merck has arranged to acquire 100% of Sigma-Aldrich for $140 per share, a 36% premium to the one-month average trading price prior to the announcement.

Sigma-Aldrich provides research chemicals and biochemicals to the global life science sector. It is based in Saint Louis, USA. The company provides a library of over 147,000 chemical products.

The merged company will have combined sales of around €4.7 billion ($6.83 billion) - based on FY13 results - and a supply chain that can support the delivery of more than 300,000 products.

Pending shareholder and regulatory approvals, the transaction is expected to complete in mid-2015.

In a video interview, Merck chairman Karl-Ludwig Kley said the company aims to use the merger to improve its US presence, expand into Asian countries and deliver services via Sigma-Aldrich's e-commerce platform.

He said the merger should not be taken as an indication that the oldest pharmaceutical company in the world is stepping back from pharma research.

“We don’t let anyone become older than us. We will stay in pharma, we are committed to pharma ... [it will] remain an integral part of our company,” he said.

Kley separately said that Sigma-Aldrich’s business is highly complementary to Merck’s own.

“In one of the world’s key industries, two companies that fit perfectly together have found each other to present a much broader product offering to our global customers in research, pharma and biopharma manufacturing and diagnostic and testing labs,” he said. “What’s more, the combination gives us the possibility to invest even more in innovation going forward.”

Despite the offer price having a 37% premium, a Sigma-Aldrich investor has filed a shareholder lawsuit seeking to block the sale on the grounds that it undervalues the company.