Zacks_Analysts' Blog : EU Green Signal for Millipore Deal - Analyst Blog

In a recent filing with the Securities and Exchange Commission (“SEC"), Millipore Corporation (MIL) announced that the European Commission has cleared Merck KGaA’s (MKGAF) acquisition of Millipore. The acquisition, which is scheduled to go through by July 14, 2010, has been cleared under the European Community Merger Regulation.

 

The acquisition agreement was initially announced in late February 2010. According to the agreement, Merck KGaA will acquire all outstanding shares of common stock of Millipore for $107 per share in cash, or a total transaction value, including net debt, of approximately €5.3 billion ($7.2 billion).

 

Millipore and Merck KGaA will create a €2.1 billion ($2.9 billion) partnership in the life science sector, achieving significant scale in high-margin specialty products with an attractive growth profile. This acquisition will help the combined company to strengthen its presence in high-growth areas and expand its geographical presence.

 

Following the acquisition, contribution from Merck KGaA’s chemicals business is expected to increase to 35% of total group pro forma revenue of €8.9 billion. The business currently accounts for 25% of total revenue. The combined business is expected to generate cost synergies of $100 million (€75 million) annually. Merck KGaA expects to realize these synergies within three years of closing of the deal.

 

We currently have Neutral (Zacks Rank #3 – Hold) recommendations on both Merck KGaA and Millipore. Millipore’s business model ensures that its performance is not severely hampered by economic turbulence. The company’s business is well diversified across end-markets, product lines, and geographical regions -- this helps maintain growth even in challenging economic scenarios.