Lab chemical and life sciences company Sigma-Aldrich SIAL said that it is making progress towards completion of its proposed acquisition by Germany’s Merck KGaA. The transaction is now expected to consummate within the next two months.
Sigma-Aldrich, in Aug 2015, obtained an unconditional approval from Brazil's Council for Economic Defense (“CADE”), the final outstanding approval needed for the transaction. The approval followed the antitrust clearances from the competition authorities of Israel and South Korea. The deal was also cleared by the European Commission (“EC”) and Chinese Ministry of Commerce in Jun 2015.
The transaction is subject to Sigma-Aldrich’s fulfillment of the commitments made to the EC following the latter’s conditional approval. Sigma-Aldrich and Merck KGaA have agreed to dispose parts of Sigma-Aldrich’s solvents and inorganics business in Europe to fulfill those commitments. Negotiations with prospective buyers of these businesses are in the final stage. Once a binding agreement has been reached, the EC must approve the buyer before Merck KGaA can close its purchase of Sigma-Aldrich.
Sigma-Aldrich, on Sep 22, 2014, announced that Merck KGaA has agreed to buy it for $17 billion. Under the deal terms, Merck KGaA will buy all of the outstanding shares of Sigma-Aldrich for $140 per share in cash.
The deal is expected to be accretive to Merck KGaA’s earnings per share and also offer annual synergies of roughly $340 million, expected to be fully realized within three years after transaction closure.
The merger will create a big player in the $130 billion global life sciences industry. The integrated company will be able to cater 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 the offering of a vast array of complementary products and capabilities.
Sigma-Aldrich is a Zacks Rank #3 (Hold).
Better-ranked stocks in the chemicals space include Koppers Holdings Inc. KOP, Air Products & Chemicals Inc. APD and Israel Chemicals Ltd. ICL. While Koppers sports a Zacks Rank #1 (Strong Buy), Air Products and Israel Chemicals hold a Zacks Rank #2 (Buy).
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