The deal ends more than a week of speculation over Millipore's future.
Shares of the Billerica, Mass., company soared last week after reports said lab instrument maker Thermo Fisher Scientific Inc. had made a $6 billion offer. Millipore, which supplies tests and equipment to the biotechnology industry, then confirmed that it was evaluating strategic alternatives - including a possible sale. The company hired advisers Goldman Sachs and Cravath, Swaine & Moore LLP to help it consider its options.
Based on Millipore's 56.3 million shares outstanding at Dec. 31, Merck's $107-per-share offer is worth $6.03 billion. Including assumed debt, Merck values the deal at $7.2 billion.
"This transaction is very attractive to shareholders, customers and employees of both companies," Karl-Ludwig Kley, chairman of Merck's executive board, said in a statement. The company said the acquisition will be a strong strategic fit that allows it to expand the breadth of its business, and will create a $2.9 billion partnership in the life science sector.
Merck said that currently, its chemicals business generates around 25 percent of the company's total revenue. Following the transaction, the chemicals business will contribute 35 percent of sales.
Merck's offer marks a 50 percent premium to Millipore's $71.34 closing stock price on Feb. 19, the last trading day before takeover reports surfaced. The deal is expected to be completed in the second half of 2010.
Millipore, which has about 6,000 employees across more than 30 countries, generated sales of $1.65 billion in fiscal 2009. Merck said it will keep the company's headquarters in Billerica, combine it with Merck's U.S. chemicals headquarters and retain Millipore's senior management. Merck anticipates the combined business will create savings of $100 million (euro75 million) in the three years following the close of the deal.
Millipore shareholders still must approve the deal.
Merck, based in Darmstadt, last week reported 2009 earnings of euro366 million ($498.7 million), nearly unchanged from 2008. The company, which makes the cancer drug Erbitux, multiple sclerosis treatment Rebif and also produces liquid crystal displays for televisions and computer monitors, said revenue rose 2 percent to euro7.8 billion ($10.63 billion).
Merck said it will fund the deal with available cash and a term loan provided by Bank of America Merrill Lynch, BNP Paribas and Commerzbank. Merck plans to replace part of the facility by issuing bonds.