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Merck KGaA Chief Says $6 Billion Millipore Acquisition 'Worth Every Euro'
Merck KGaA’s $6 billion purchase of U.S. biotechnology equipment supplier Millipore Corp. is “worth every euro,” Chief Executive Officer Karl-Ludwig Kley told shareholders at the annual meeting in Frankfurt today. The deal probably will close in the second half of this year, said Kley in a speech. The acquisition is the biggest for the family-controlled maker of drugs and chemicals since the $13.7 billion purchase of Serono SA in 2007.
Merck, based in Darmstadt, Germany, is paying $107 a share for Millipore, 50 percent more than the closing price on Feb. 19, the last day of trading before Bloomberg News reported that the U.S. company had received a takeover offer from Thermo Fisher Scientific Inc. Merck’s winning bid, announced Feb. 28, will give it a more profitable business after setbacks with the Erbitux cancer drug and the cladribine multiple sclerosis pill.
“In the days after the Feb. 28 announcement of the acquisition, I was asked a couple of times whether the price was too high,” said Kley. “I have a clear answer: No, Millipore is worth every euro.”
The takeover will transform Merck’s performance and life science chemicals division, in which sales fell 4 percent last year to 1.2 billion euros ($1.6 billion), said Kley.
“This acquisition means more than just rounding off the business,” he said. “It is about transforming the division.”
The company aims to resubmit its cladribine application to the U.S. Food and Drug Administration “as quickly as possible,” Kley said. The agency rejected the application in November. Merck expects EU authorities to rule on cladribine by the third quarter and is confident the drug will be approved in Europe, Elmar Schnee, head of the company’s drugs unit, said at the meeting.
Merck is cooperating with authorities to investigate why a patient taking its experimental cancer vaccine Stimuvax developed a brain infection, said Kley.
The stock gained 72 cents, or 1.2 percent, to close at 61.57 euros in Frankfurt. Merck has fallen 4.5 percent since the company said on Feb. 23 it would reduce the dividend for 2009 by one-third. Merck is the only one of Europe’s 10 biggest drugmakers to lower the annual shareholder payout in the past year, according to Bloomberg data.
The dividend reduction is justified because economic recession, delayed payments in Greece and currency devaluation in Venezuela led to lower pretax profits last year, Kley said.
This year “will not be an easy year either,” the executive said.
Merck still expects its operating result to rise 20 percent to 30 percent this year on a sales increase of 3 percent to 7 percent, said Kley.
To contact the reporter on this story: Naomi Kresge in Frankfurt at firstname.lastname@example.org