Merck KGaA Buys Out Millipore For $7.2B

• Merck to acquire all outstanding Millipore shares for US$ 107 per share in cash, creating a world-class partner for the life science sector
• Agreed transaction valued at approximately EUR 5.3 billion (US$ 7.2 billion)
• Combination will create a EUR 2.1 billion (US$ 2.9 billion) partner for the Life Science sector and transform Merck Chemicals
• Combined business will have significant scale in high-growth bioresearch and bioproduction segments
• Merck intends to retain Millipore's headquarters in Billerica, Massachusetts

Merck KGaA, a global pharmaceutical and chemical company, and Millipore Corporation (NYSE: MIL), a leading Life Science company based in Billerica, Massachusetts, USA, today announced that they have entered into a definitive agreement under which Merck KGaA will acquire all outstanding shares of common stock of Millipore, for US$ 107 per share in cash, or a total transaction value, including net debt, of approximately EUR 5.3 billion (US$ 7.2 billion). The transaction was approved by the boards of directors of both companies. Millipore and Merck will create a EUR 2.1 billion (US$ 2.9 billion) world-class partner for the Life Science sector, achieving significant scale in high-margin specialty products with an attractive growth profile.

"This transaction is very attractive to shareholders, customers and employees of both companies," said Dr. Karl-Ludwig Kley, Chairman of the Executive Board of Merck. "This is a combination with an excellent strategic fit, which will allow us to cover the entire value chain for our pharma and biopharma customers, offering integrated solutions beyond chemicals."

Millipore has a strong position in the attractive bioresearch and bioproduction segments, offering a comprehensive range of products, technologies and services for pharma and biotech companies, as well as for academia, to improve laboratory productivity and to develop and optimize manufacturing processes. In 2009, Millipore generated sales of US$ 1.7 billion, with around 6,000 employees in more than 30 countries.

Martin Madaus, Chairman, President and CEO of Millipore said, "Over the past five years, we have transformed Millipore into a life science leader by driving innovation, entering new markets, and generating exceptional operational performance. Today's announcement, which is the outcome of a thorough strategic review process, is a validation of the tremendous value of the Millipore brand and a testament to the value this transformation has created for all of our stakeholders. We are excited to join a high-quality company like Merck as we will gain greater scale and scope in the life science industry. This is a very positive outcome for our employees and customers as we continue to build on our strategy for growth, while maintaining our headquarters in Billerica."

Together, Millipore and Merck will have a significant presence in high-growth segments and an enhanced geographic presence. Combining the research and development capabilities of both companies will create a powerful innovation platform to develop cutting-edge technologies that are tailored even more closely to the needs of customers.

Dr. Kley added: "By combining Millipore's bioscience and bioprocess knowledge with our own expertise in serving pharma customers, we will be able to unlock value in our chemicals business and transform it into a strong growth driver for Merck. Through this acquisition, we will expand the overall product offering of the Merck Group, using the well-recognized Millipore brand in addition to our own brand."

The acquisition is fully in line with Merck's strategy of focusing on high-margin, specialty products with an attractive growth profile. In addition, the transaction will lead to a more balanced business profile for the Group. Currently, the Chemicals business sector generates around 25% of Merck's total revenues. Following the transaction, the chemicals business will contribute 35% of total Group revenues of EUR 8.9 billion (pro forma), driven by its strong Liquid Crystals business and the new world-class life science business.

In order to ensure a seamless integration of the two businesses, Merck will apply a "best of both worlds" integration approach across all operating business functions. Merck plans to build on Millipore's talented workforce and intends to retain its senior management. The company also plans to maintain Millipore's headquarters in Billerica and combine it with Merck's U.S. chemicals headquarters. Merck expects that the combined business will generate annual cost synergies of around US$ 100 million (EUR 75 million), which Merck expects to realize within three years from the closing of the transaction.

The acquisition will be funded through available cash and a term loan provided by Bank of America Merrill Lynch, BNP Paribas and Commerzbank Aktiengesellschaft. Merck plans to replace part of the facility through the issuance of bonds. Merck is committed to retaining a solid investment-grade rating.

Completion of the acquisition requires the approval of Millipore shareholders, for which Millipore will call a special shareholders meeting, and the satisfaction of other customary conditions, including antitrust clearance. Due to the fact that the two businesses are highly complementary, Merck expects that the transaction will clear regulatory review. Merck anticipates that the transaction will be completed in the second half of 2010, at which time all outstanding shares of Millipore common stock will be exchanged for the right to receive the agreed cash payment.

Guggenheim Securities, LLC and Perella Weinberg Partners LP have acted as financial advisors to Merck in the transaction, and Skadden, Arps, Slate, Meagher & Flom LLP served as the Group's legal advisor. Goldman Sachs & Co. acted as financial advisor to Millipore, and Cravath, Swaine & Moore LLP and Ropes & Gray LLP acted as Millipore's legal advisors.

About Merck

Merck is a global pharmaceutical and chemical company with total revenues of EUR 7.7 billion in 2009, a history that began in 1668, and a future shaped by approximately 33,000 employees in 61 countries. Its success is characterized by innovations from entrepreneurial employees. Merck's operating activities come under the umbrella of Merck KGaA, in which the Merck family holds an approximately 70% interest and free shareholders own the remaining approximately 30%. In 1917 the U.S. subsidiary Merck & Co. was expropriated and has been an independent company ever since.

About Millipore

Millipore (NYSE: MIL) is a Life Science leader providing cutting-edge technologies, tools, and services for bioscience research and biopharmaceutical manufacturing. As a strategic partner, we collaborate with customers to confront the world's challenging human health issues. From research to development to production, our scientific expertise and innovative solutions help customers tackle their most complex problems and achieve their goals. Millipore Corporation is an S&P 500 company with more than 6,000 employees worldwide.

SOURCE: Millipore