German pharmaceutical giant Merck is acquiring Sigma-Aldrich Corp., a US supplier of laboratory testing materials, for US$17 billion.
Merck will pay US$140 per share, a 37 percent premium to Sigma’s closing share price on Friday, the Wall Street Journal reported.
St. Louis-based Sigma-Aldrich is one of the largest makers of chemicals and biological materials used in scientific laboratories, with sales reaching US$2.7 billion last year, according to the newspaper.
The deal would enable the new company to better compete for business from pharmaceutical companies, which have sought to cut costs by limiting the number of suppliers they use, analysts said.
“By merging, we are securing for us stable growth and profitability in our life science business and benefiting from trends like increasing globalization of research and pharmaceutical production,” Merck chief executive Karl-Ludwig Kley was quoted as saying.
The merger would also allow the German company to reduce its reliance on its pharmaceutical unit Merck Serono, whose sales have been dominated by just two prescription drugs — Rebif for multiple sclerosis and Erbitux for cancer treatment, the report said.
Rebif sales dropped 2.8 percent in the second quarter amid stiff competition from generic drugs, and Erbitux is also expected to face competition from generics by 2018, it said.
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