Merck KGaA Acquires Millipore and Founds New Divisions

Merck KGaA (Darmstadt, Germany), a global pharmaceutical and chemical company, completed its acquisition of Millipore (Billerica, MA), a life-science company, on July 15, 2010, for an aggregate purchase price of roughly EUR 5.2 billion ($6.7 billion). Merck had agreed to acquire Millipore on February 28, 2010 for $107 in cash per share of Millipore common stock. Millipore’s shareholders approved the acquisition at a special meeting on June 3, 2010, and the transaction received antitrust clearance in the United States and Europe. Merck will now begin the process of delisting Millipore shares from the New York Stock Exchange and removing the shares from registration with the US Securities and Exchange Commission.

Upon completion of the acquisition, Merck established a Merck Millipore division within Merck Chemicals. Merck Millipore, which will be known as EMD Millipore in the US and Canada, has about 10,000 employees in 64 countries and earned pro forma revenues of EUR 2.1 billion ($2.7 billion) in fiscal year 2009. The new division will be headquartered in Billerica, Massachusetts, and supported by locations throughout the Americas, Europe, and Asia-Pacific. Merck Millipore will provide products, technologies, and services to improve laboratory productivity and develop and optimize manufacturing processes for pharmaceutical and biotechnology companies.

Merck Millipore will consist of three business units: Bioscience, Lab Solutions, and Process Solutions. Each business unit will comprise several key focus areas known as business fields. The new division will benefit from Merck’s global manufacturing and distribution capabilities, as well as its sales organization.

The company intends Merck Millipore to be a world-class partner for the life-science sector. “We will now move quickly to bring together the expertise and complementary capabilities of both Merck and Millipore employees to capture the significant opportunities in the high-growth, high-margin market segments such as bioresearch and bioproduction,” said Dr. Karl-Ludwig Kley, chairman of the Merck executive board, in a press release.

Merck Millipore has appointed its senior management team from both companies to ensure a smooth integration. Bernd Reckmann, member of Merck’s executive board, will lead Merck Millipore and remain head of the Merck Chemicals business sector. Jon DiVincenzo, current president of Millipore’s Bioscience division, will lead the division’s Bioscience business unit. Klaus R. Bischoff, currently president of Merck’s Performance and Life-Science Chemicals division, will lead the Lab Solutions business unit. Jean-Paul Mangeolle, President of Millipore’s Bioprocess division, will be the new head of the Process Solutions business unit. Peter C. Kershaw, Millipore’s corporate vice-president of global operations, will head the division’s operations.

Merck expects to make the majority of the integration decisions by the end of 2010. The company predicts that the combined business will result in annual cost synergies of about $100 million, and Merck expects to realize the synergies within three years of the closing of the transaction.

“The increased breadth of the Merck Millipore product portfolio, together with the expertise of our talented people, will allow us to deepen our customer relationships and gain the new insights we need to further drive innovation. We will also bring together our research and development capabilities, which will make Merck Millipore one of the top three investors in research and development in the life-science tools industry,” said Reckmann in a press release.

Merck Chemicals also created a new Performance Materials division, which will comprise Merck’s current Materials businesses and activities (i.e., liquid crystals, pigments, and cosmetics). Walter Galinat, current head of the Liquid Crystals division, will lead the Performance Materials division.

“The integration of our specialty-chemicals materials businesses in Performance Materials allows Merck to merge innovative chemical research and development, strong application know-how, excellent product solutions, and distinctive customer focus in promising growth areas,” said Galinat in a press release. The division had pro forma sales of more than EUR 1.0 billion ($1.3 billion) for fiscal year 2009 and approximately 5000 employees worldwide.