Sigma-Aldrich Corporation (SIAL) and Merck KGaA (MKGAY) announced that the latter has obtained antitrust clearance from the US FTC for its previously announced acquisition of Sigma-Aldrich. Merck KGaA entered into an agreement to acquire Sigma-Aldrich for $17 billion in Sep 2014.
Subsequently, on Dec 5, the acquisition was approved by Sigma-Aldrich shareholders at a special meeting at St. Louis. Pursuant to other closing conditions, the companies expect the transaction to close in mid-2015.
The U.S. antitrust clearance remains subject to certain other conditions, including regulatory approval in additional jurisdictions. The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act) with regard to the proposed acquisition of Sigma-Aldrich expired on Dec 22, 2014 thereby completing the US HSR Act antitrust notification and review requirement for its acquisition by Merck KGaA.
The merger will create a big player in the $130 billion global life sciences industry. The integrated company will be able to cater to the needs of life science customers globally with a highly attractive set of established brands and an efficient supply chain that can facilitate the delivery of over 300,000 products. The customers will benefit from a wide array of complementary products and capabilities.
The deal is expected to be immediately accretive to Merck KGaA’s earnings per share and offer annual synergies of roughly $340 million, expected to be fully realized within three years following the closure of the transaction.
Sigma-Aldrich saw its profit slip in third-quarter 2014 as higher charges offset a rise in its top line in the quarter. Earnings for the quarter matched the Zacks Consensus Estimate. Sales rose on healthy momentum in the company’s Applied division, but missed expectations. The company did not provide guidance for 2014 due to its acquisition by Merck KGaA.
Sigma-Aldrich is a Zacks Rank #4 (Sell) stock.
Better-ranked companies in the specialty chemicals space include Minerals Technologies Inc. (MTX) and Rockwood Holdings, Inc. (ROC), both sporting a Zacks Rank #1 (Strong Buy).
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