Merck KgaA to Acquire Serono
September 21 2006 - 8:41AM
PR Newswire (US)
GENEVA, Switzerland, September 21 /PRNewswire-FirstCall/ -- Serono
(virt-x: SEO and NYSE: SRA) has today been informed that Merck KGaA
of Darmstadt, Germany has published the following press release:
Merck KGaA Announces Acquisition of Serono SA - Transaction
transforms Merck Ethicals - Merck pays CHF 1,100 per share in cash
- Merck holds 64.5% of Serono capital and 75.5% of the voting
rights - Public tender offer of CHF 1,100 per share Darmstadt,
Germany, September 21, 2006 - Merck KGaA announced today that it
has entered into an agreement with the Bertarelli Family, which
owns the majority stake of Serono SA, to purchase their Serono
shares to create a strategically compelling combination with the
size to compete in the global pharmaceutical market. Subject to
antitrust review and closing of the purchase, Merck holds 64.5% of
the capital of Serono and 75.5% of the voting rights, for which
Merck agreed to pay CHF 1,100 per share in cash. Merck will make a
public tender offer under Swiss law for the same price of CHF 1,100
per share. The offer price represents a 20% premium to the share
price as of September 20, 2006, and a total equity value of CHF
16.6 billion (approximately EUR 10.6 billion) on a fully diluted
basis. "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," said Michael Roemer, Chairman of the Executive Board of
Merck KGaA. "Both companies have a unique opportunity to achieve a
competitive advantage through a combined EUR 1 billion R&D
budget and a stronger product portfolio. The companies are a
perfect fit with 28 compounds in development. Together with Serono
management and employees, we will create a world-class
biopharmaceutical company with global footprint, cutting-edge
biotechnology manufacturing and strong growth." Ernesto Bertarelli
said: "With this transaction we create a combined business with
strong capabilities, especially in neurology and oncology. Together
with Serono, Merck will be a world-class biotechnology company and
a major player in the global pharmaceutical market. This match will
allow Serono's innovative biotech abilities to play an important
role in the future of the combined company while expanding its
global reach." Strategic Rationale Together with Serono, Merck
achieves: - Critical mass in R&D with an annual budget of
approximately EUR 1 billion - R&D capabilities greater than the
sum of the parts - Market-leading Multiple Sclerosis franchise to
broaden business portfolio - Expanded geographic reach and access
to the U.S. market - World-class biotechnology manufacturing
Merck-Serono Biopharmaceuticals Merck's Pharma Ethicals division
will be combined with Serono to create "Merck-Serono
Biopharmaceuticals." The headquarters of this business will be in
Geneva, Switzerland. Merck-Serono Biopharmaceuticals' U.S.
headquarters will be in Boston, MA. Based on 2005 figures, the new
Merck Group would have pro-forma sales of EUR 7.7 billion,
including EUR 3.6 billion in biopharmaceutical sales. The Merck
Group will have a total number of about 35,000 employees. Merck's
successful business model of competing in both pharmaceuticals and
chemicals will remain in place and be strengthened by this
combination. Strong financial profile and significant value
creation The acquisition will be funded initially through existing
Merck cash and a bridge financing. The all-cash transaction will be
refinanced through a combination of a syndicated loan, a bond and a
capital increase of EUR 2 to 2.5 billion, in which the Merck Family
will participate with an amount of up to EUR 1 billion. Merck is
committed to retaining its investment-grade rating and expects a
rapid deleveraging driven by a strong operating cash flow. Merck
expects the transaction will have a positive impact on adjusted
earnings per share (before transaction related charges and one time
restructuring costs). Offer Details The offer is subject to the
customary conditions, including the receipt of antitrust clearances
and the closing of the transaction with the Bertarelli family. Full
details of the conditions will be disclosed in the offer document.
The transaction is expected to close in early 2007. Important
Information The information contained in this press release is
neither an offer to acquire nor an invitation to sell or make an
offer to sell securities (especially shares or American depositary
shares of Serono SA). The offer document for the public tender
offer will presumably be published in November 2006. Only the
conditions contained in this offer document will be decisive. No
Offer will be made in the United States of America The offer will
not be made to, and Serono shares will not be accepted from,
holders of Serono shares in the United States and no offer will be
made for Serono ADRs/ADSs. This communication is not an extension
of the offer in the United States. Forward-looking statements Merck
The information in this document may contain "forward-looking
statements." Forward-looking statements may be identified by words
such as "expects", "anticipates", "intends", "plans", "believes",
"seeks", "estimates", "will" or words of similar meaning and
include, but are not limited to, statements about the expected
future business of Serono SA and of Merck KGaA resulting from the
proposed transaction. These statements are based on the current
expectations of management of Merck KGaA and E. Merck OHG, and are
inherently subject to uncertainties and changes in circumstances.
Among the factors that could cause actual results to differ
materially from those described in the forward-looking statements
are factors relating to satisfaction of the conditions to the
proposed transaction, and changes in global, political, economic,
business, competitive, market and regulatory forces. Merck KGaA and
E. Merck OHG do not undertake any obligation to update the
forward-looking statements to reflect actual results, or any change
in events, conditions, assumptions or other factors. Serono Some of
the statements in this press release are forward looking. Such
statements are inherently subject to known and unknown risks,
uncertainties and other factors that may cause actual results,
performance or achievements of Serono S.A. and affiliates to be
materially different from those expected or anticipated in the
forward-looking statements. Forward-looking statements are based on
Serono's current expectations and assumptions, which may be
affected by a number of factors, including those discussed in this
press release and more fully described in Serono's Annual Report on
Form 20-F filed with the U.S. Securities and Exchange Commission on
February 28, 2006. These factors include any failure or delay in
Serono's ability to develop new products, any failure to receive
anticipated regulatory approvals, any problems in commercializing
current products as a result of competition or other factors, our
ability to obtain reimbursement coverage for our products, the
outcome of any government investigations and litigation. Serono is
providing this information as of the date of this press release,
and has no responsibility to update the forward-looking statements
contained in this press release to reflect events or circumstances
occurring after the date of this press release. About Merck Merck
is a global pharmaceutical and chemical company with sales of EUR
5.9 billion in 2005, a history that began in 1668, and a future
shaped by 29,958 employees in 55 countries. Its success is
characterized by innovations from entrepreneurial employees.
Merck's operating activities come under the umbrella of Merck KGaA,
in which the Merck family holds a 73% interest and free
shareholders own the remaining 27%. In 1917 the U.S. subsidiary
Merck & Co. was expropriated and has been an independent
company ever since. About Serono Serono is a global biotechnology
leader. The Company has eight biotechnology products, Rebif(R),
Gonal-f(R), Luveris(R), Ovidrel(R )/Ovitrelle(R), Serostim(R),
Saizen(R), Zorbtive(TM) and Raptiva(R). In addition to being the
world leader in reproductive health, Serono has strong market
positions in neurology, metabolism and growth and has recently
entered the psoriasis area. The Company's research programs are
focused on growing these businesses and on establishing new
therapeutic areas, including oncology and autoimmune diseases. In
2005, Serono, whose products are sold in over 90 countries,
achieved worldwide revenues of US$2,586.4 million. Reported net
loss in 2005 was US$106.1 million, reflecting a charge of US$725
million taken relating to the settlement of the US Attorney's
Office investigation of Serostim. Excluding this charge as well as
other non-recurring items, adjusted net income grew 28.4% to
US$565.3 million in 2005. Bearer shares of Serono S.A., the holding
company, are traded on the virt-x (SEO) and its American Depositary
Shares are traded on the New York Stock Exchange (SRA). Note to
Editors: Merck cordially invites journalists to attend a press
conference at 3 p.m. today in the company headquarters, Frankfurter
Strasse 250, Darmstadt, Germany. Registration is not required. The
press conference presentation, as well as the question-and-answer
session, will be available live on the Merck website -
http://www.merck.de/. The press conference will be conducted in
German with simultaneous translation into English. All Merck Press
Releases are distributed by e-mail at the same time they become
available on the Merck Website. Please go to
http://www.subscribe.merck.de/ to register online, change your
selection or discontinue this service. DATASOURCE: Serono
International S A CONTACT: For more information, please contact:
Merck KgaA, Frankfurter Strasse 250, 64293 Darmstadt, Hotline
+49-(0)-6151-72-5000, http://www.merck.de/; Head External
Communications -2386, Corporate Media Relations -2578 / -7144, Fax
+49-(0)-6151-72-7707, ; Media Relations, Darmstadt Site -2579 /
-7109, Fax +49-(0)-6151-72-3138, ; Serono: Corporate Media,
Relations: Tel: +41-22-739-36-00, Fax: +41-22-739-30-85,
http://www.serono.com/; Media Relations, USA: Tel: +1-781-681-2340,
Fax: +1-781-681-2935, http://www.seronousa.com/; Corporate Investor
Relations: Tel: +41-22-739-36-01, Fax: +41-22-739-30-22, Reuters:
SEO.VX / SRA.N, Bloomberg: SEO VX / SRA US; Investor Relations,
USA: Tel: +1-781-681-2552, Fax: +1-781-681-2912
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