Merck KGaA agreed to acquire a 64.5-percent majority stake in Serono from the Bertarelli family for 1100 Swiss francs per share, in an all-cash transaction. The German company indicated Thursday that it intends to make a public tender offer to acquire the rest of Serono's shares at the same price per share, bringing the total value of the deal to 16.6 billion Swiss francs ($13.3 billion). The combined pharmaceutical division with the Swiss biotechnology company will be named Merck-Serono Biopharmaceuticals.
The bid represents a 20-percent premium on the shares' closing price on September 20. Merck plans to refinance the acquisition, which is expected to close early in 2007, in part by increasing its capital.
Commenting on the news, Lombard Odier Darier Hentsch analyst Karl Heinz Koch noted that "overall it looks like a good fit. [Serono's multiple sclerosis drug] Rebif was the main source of revenue and profit," Bloomberg reports. "This is somewhat counterbalanced now by [the products] Merck has. Oncology is where Serono wanted to move," he explained.
However, Mirabaud Securities analyst Nick Turner pointed out that he thought Merck paid a high price for the Swiss-based company, adding that he sees "few synergies and little in the way of cultural fit. Both companies have failed research and development organisations, '' Bloomberg reports. Nonetheless, analyst Martin Possienke of Equinet maintained that "even though the valuation does not imply a bargain, the strategic rationale of an expanded pharma business might pay off over time," as reported in CNN Money.
In a conference call with analysts, Merck stated it believes the acquisition will produce synergies of 100 million euros over the next three years, as reported in The Washington Post. Serono's shares rose as much as 18 percent on the news.
In other news, Danish drugmaker Nycomed also reported Thursday that it has agreed to acquire Altana's pharmaceutical business for approximately 4.5 billion euros ($5.7 billion).