Merck KGaA in $11 billion deal for Sigma-Aldrich

Germany’s life sciences group Merck KGaA (MRK: DE) has entered into a definitive agreement to acquire USA-based Sigma-Aldrich (Nasdaq: SIAL) for $17.0 billion (13.1 billion euros), establishing one of the leading players in the $130 billion global life science industry.

Merck will acquire all of the outstanding shares of Sigma-Aldrich for $140 per share in cash. The agreed price represents a 37% premium to the latest closing price of $102.37 on September 19, 2014, and a 36% premium to the one-month average closing price. The transaction is expected to be immediately accretive to Merck’s earnings per share pre and earnings before interest, taxes, depreciation and amortization (EBITDA) margin. Merck expects to achieve annual synergies of around 260 million euros (about $340 million), which should be fully realized within three years after closing.

The acquisition expands Merck Millipore’s global reach, increasing the company’s presence in North America and adding exposure to fast-growing Asian markets. The company acquired Millipore, a US maker of lab equipment and chemicals, in 2010 for about $6 billion.