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Sigma-Aldrich's Buyout by Merck KGaA Gets EC Clearance - Analyst Blog

Zacks Equity Research
Updated

Sigma-Aldrich Corporation SIAL declared that the European Commission (“EC”) has approved the proposed acquisition of the company by Merck KGaA, Darmstadt, Germany. The company also informed that it has received clearance for the transaction from the Chinese Ministry of Commerce.

All these jurisdictions follow the clearance received in May this year from Japanese authorities. The deal has also received antitrust clearance in the U.S., Russia, Serbia, Ukraine, South Africa and Taiwan.

Sigma-Aldrich's shares rose 0.4% in the trading session on Monday, before closing the day at $139.45.

The terms and conditions imposed by the EC required both Sigma-Aldrich and Merck KGaA to sell parts of Sigma-Aldrich's solvents and inorganics chemicals business in the European Economic Area as a fully integrated, stand-alone business. This condition is inclusive of the rights to all solvents and inorganics sold worldwide under the Fluka brand.

In this context, in Dec 2014, Merck KGaA had announced the receipt of antitrust clearance from the U.S. FTC for its takeover of Sigma-Aldrich. Moreover, the acquisition was approved by the shareholders of Sigma-Aldrich at a special meeting at St. Louis.

However, the transaction remains subject to antitrust clearance from authorities in Brazil, Israel and South Korea.  Both the companies are striving to wrap up the transaction by mid-2015.

On Sep 22, 2014, Merck KGaA announced a definitive agreement to acquire Sigma-Aldrich for $140 per share in cash, or a total of $17 billion. The merger will create a big player in the global life sciences industry. The integrated company will be able to cater to the needs of life science customers globally with a highly attractive set of established brands and an efficient supply chain.

The deal is expected to be immediately accretive to Merck KGaA’s earnings per share and offer annual synergies of roughly $340 million, expected to be fully realized within three years following the closure of the transaction.

Sigma-Aldrich carries a Zacks Rank #3 (Hold).

Better-ranked companies in the specialty chemical space include Ferro Corp. FOE, KMG Chemicals Inc. KMG and Flexible Solutions International Inc. FSI. All these stocks sport a Zacks Rank #1 (Strong Buy).

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
SIGMA ALDRICH (SIAL): Free Stock Analysis Report
 
FERRO CORP (FOE): Free Stock Analysis Report
 
KMG CHEMICALS (KMG): Free Stock Analysis Report
 
FLEXIBLE SOLTNS (FSI): Free Stock Analysis Report
 
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