Sigma-Aldrich Shareholders Clears Takeover by Merck KGaA
Lab chemical and life sciences company Sigma-Aldrich’s (SIAL) proposed acquisition by Germany’s Merck KGaA has been approved by the former’s shareholders at a special meeting. The company’s shareholders also cleared, on an advisory, non-binding basis, compensation that may become payable to certain executive officers as a result of the takeover.
The transaction, which is now subject to regulatory clearances and other closing conditions, is expected to close in mid-2015.
Sigma-Aldrich’s shares little moved to close at 136.79 last Friday. The stock has racked up a healthy year-to-date return of roughly 46% and a one-year return of around 57%.
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 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.
The deal is expected to be immediately 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.
Sigma-Aldrich saw its profit slip in third-quarter 2014 as higher charges offset a rise in its top line in the quarter. Earnings for the quarter matched the Zacks Consensus Estimate. Sales rose on healthy momentum in the company’s Applied division, but missed expectations. The company did not provide guidance for 2014 due to its acquisition by Merck KGaA.
Sigma-Aldrich is a Zacks Rank #4 (Sell) stock.
Better-ranked companies in the specialty chemicals space include Minerals Technologies Inc. (MTX), Rockwood Holdings, Inc. (ROC) and NL Industries Inc. (NL) with all holding a Zacks Rank #1 (Strong Buy).
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