Acquisitions Assemble

Merck KGaA (not to be confused with US-based Merck and Co) will buy Sigma-Aldrich, headquartered in St Louis, MO, for $140 per share in cash, a significant premium for shareholders and a “quantum leap” for its life science business. Justifying the price, Merck CEO Karl-Ludwig Kley commented in a video released by the company online: “If you want to buy a Rolls Royce, you don’t get it at a bargain price.”

Kley described the $17 billion (€13.1 billion) deal as a “compelling value proposition”, which will double Merck’s US life sciences business and strengthen their position in Asian markets. He said that the acquisition fed directly into Merck’s strategic plans for 2018 – its 350th (!) anniversary.

Relations are rather less friendly in Valeant Pharmaceuticals International’s ongoing $49 billion (€38 billion) takeover bid for Botox-maker Allergan. Allergan has been fighting the deal since April, and exchanges between the companies have become increasingly heated. Allergan recently released a statement from its board of directors: “Our conclusion that Valeant’s offer is grossly inadequate and substantially undervalues Allergan remains unchanged.” Meanwhile, Valeant accused Allergan of “avoiding constructive engagement at all costs.” At the request of eager shareholders, Allergan has scheduled a special meeting on December 18.

Finally, the $54 billion takeover of UK pharma company Shire by US-based Abbvie is in jeopardy. Abbvie released a statement on October 15 saying that its board of directors had withdrawn its support, following changes in US tax regulation, which they said had introduced too much uncertainty into the deal and eliminated a number of financial benefits. The new rules are designed to make ‘tax inversion’ – moving the tax base of the company out of the US to reduce the tax paid – more difficult.