Merck to Buy Rival Serono
German drugmaker, Merck KGaA has agreed to pay SFr16.6bn (€10.6bn) for a majority stake in Swiss biotechnology company Serono. Merck will now have a 75.5 percent of the voting rights in the Swiss company. The deal will create one of Europe's biggest pharmaceutical groups.
The billionaire Bertarelli family, which owned a 64.5 percent stake will sell it to Merck for £4.6bn in an all cash deal. Merck said, "The all-cash transaction will be refinanced through a combination of a syndicated loan, a bond and a capital increase of €2bn to €2.5bn, in which the Merck family will participate with an amount of up to €1bn."
Merck agreed to pay SFr1,100 (£466) a share in cash, a 20 per cent premium to Serono's closing price on Wednesday. Serono chief executive Ernesto Bertarelli said, "We are very happy with the price. This is good for the family, good for the shareholders."
The deal would transform Merck’s pharmaceuticals business. The combined group would gain a competitive advantage through a combined research and development budget of about €1bn and 28 compounds in development.
Chief executive Michael Roemer said, "This acquisition transforms Merck's pharmaceutical business and creates a leading position in the world of biologic medicine …… It gives the companies a competitive advantage with a combined €1bn research and development budget and a stronger product portfolio.”
The deal is thus a win-win situation for both the German and Swiss drug-maker.
Merck had been under pressure to make a bold strategic move to bulk up its European drugs portfolio after it failed in its €14.6 billion hostile bid assault on German rival Schering. Serono was first put on the block by Goldman Sachs last November but initially failed to find a buyer at an acceptable price. Now, it can be said that the wait was worth it.
