Merck to acquire majority shares of Serono for CHF 16.6 billion

By Lisa Kerner

Charlotte, N.C., Sept. 21 - Merck KGaA said it agreed to purchase the majority of Serono SA shares from the Bertarelli family for CHF 1,100 per share, a 20% premium to the shares priced at Sept. 20 for a total equity value of CHF 16.6 billion.

Merck will fund the acquisition initially through existing cash and a bridge financing, with the all-cash transaction refinanced through a combination of a syndicated loan, a bond and a capital increase of €2 billion to €2.5 billion. The Merck family will participate with up to €1 billion.

The transaction is expected to close in early 2007.

Merck will combine Serono with its Pharma Ethicals division to form Merck-Serono Biopharmaceuticals with headquarter locations in Geneva and Boston.

The newly formed company brings to market expanded research and development with an annual budget of €1 billion, a leading multiple sclerosis franchise and an expanded geographic reach, which includes the United States.

"This acquisition transforms Merck's Pharmaceuticals business and creates a leading position in the world of biologic medicines, which helps to ensure its future through the 21st century," the chairman of Merck's executive board, Michael Roemer, said in a news release.

Merck is a global research-driven pharmaceutical company located in Darmstadt, Germany.

Biopharmaceutical company Serono is based in Geneva.

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