Millipore To March Down the Aisle with Merck KGaA, Not Thermo Fisher

3/1/10Follow @wroush

Reports last week that Billerica, MA-based life sciences equipment supplier Millipore was in merger talks with Waltham, MA-based Thermo Fisher Scientific were half right. Millipore was in merger talks—but it has settled on suitor Merck KGaA, the German pharmaceutical and chemicals giant. And Millipore is fetching a higher price than the earlier reports suggested, too.

Millipore said Merck will acquire all outstanding Millipore (NYSE: MIL) shares for $107 per share, or $7.2 billion, in an all-cash transaction. The boards of both companies have approved the merger; now the deal goes to Millipore shareholders for a vote. Merck KGaA is paying about a 13 percent premium above Millipore’s last closing stock price of $94.41 on Friday.

The news comes after a week of speculation that Millipore was on the auction block. A February 22 story published by Bloomberg Business Week (and summed up by Xconomy) said Thermo Fisher had made an unsolicited $6 billion bid for Millipore. Thermo Fisher offered no comment on the story. Millipore confirmed on February 23 that it was entertaining bids, but did not mention Thermo Fisher or Merck. The company said at the time that its board of directors was “evaluating strategic alternatives to enhance shareholder value, including by pursuing a process with potential bidders to explore a possible merger or sale of the Company.”

According to today’s announcement, Merck KGaA plans to retain Millipore’s senior management, keep the company’s Billerica headquarters open, and gradually combine Millipore with the German company’s chemicals business in the U.S. Merck’s U.S. chemicals subsidiary, EMD Chemicals, is currently headquartered in Gibbstown, NJ.

Combining Millipore with EMD will lead to cost savings of around $100 million per year by 2013, Merck KGaA said. EMD has already begun downsizing: it announced the closure of a 70-employee test kit manufacturing facility in Madison, WI, in December, and said it planned to cut another 230 jobs nationwide.

Merck KGaA chairman Karl-Ludwig Kley called the combination “an excellent strategic fit” that would allow the company to offer a greater range of products to its customers. Millipore, which was founded in 1954, has 6,000 employees in 30 countries, and hit $1.7 billion in sales in 2009. The company is best known for making filters with micrometer-sized pores, used for everything from basic life sciences research to biologic drug manufacturing, but it also sells a wide range of other products from custom antibodies to wine filtration systems.

“Over the past five years, we have transformed Millipore into a life science leader by driving innovation, entering new markets, and generating exceptional operational performance,” said Millipore CEO Martin Madaus, in a statement. “Today’s announcement, which is the outcome of a thorough strategic review process, is a validation of the tremendous value of the Millipore brand…We are excited to join a high-quality company like Merck as we will gain greater scale and scope in the life science industry.”

Merck KGaA has no corporate connection with U.S. pharmaceuticals giant Merck & Co., which is based in Whitehouse Station, NJ, and was separated from the German parent company in 1917.

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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  • Greg

    I’m not sure who has the larger distribution arm, and that may be the real reason for the “merger”, but the phrase “excellent strategic fit” is not one that would have accrued to me in this case. A thermofisher mix would have though.

    The savings by firing 300 people will be offset by the cost of new stationary and the eventual movement of Millipore to NJ. That must be the fit…