Found this info kind of interesting considering Merck's MS candidate seems to have failed.
Merck to take control of Swiss drug maker
By Carter Dougherty International Herald Tribune
Published: September 21, 2006
FRANKFURT Merck of Germany announced Thursday that it would take control of Serono, a Swiss pharmaceutical maker, for €10.6 billion after failing to secure a merger with Schering, its German competitor, this year.
A deal with Schering would have created a German powerhouse focused on traditional pharmaceuticals. But the combination with Serono will put Merck on a different path, creating a strong player in the fast-growing field of biopharmaceuticals - drugs that use living organisms to treat diseases like cancer.
"This acquisition transforms Merck's pharmaceuticals business and creates a leading position in the world of biologic medicines," Michael Römer, the chairman of Merck's executive board, said.
For Serono, which is based in Geneva, the access to Merck's global sales and marketing network will allow its strengths in biomedicines to be projected around the world.
"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," Serono's chief executive, Ernesto Bertarelli, said.
The new company would have €7.7 billion, or $9.8 billion, in annual sales, based on 2005 figures, and about half of that would come from biopharmaceuticals. Merck, which also has a strong presence in manufacture of the liquid crystals that go into flat-screen monitors, notched up an €893 million pretax profit last year on sales of €5.9 billion.
Bertarelli is an heir to the billionaire Swiss family that owns slightly under two-thirds of Serono stock, which it will sell to Merck for 1,100 Swiss francs, or $880, a share. Merck said it would finance the acquisition in part through a capital increase of €2 billion to €2.5 billion, and that the Merck family, which controls the company, would purchase up to €1 billion of that new issue.
The news depressed Merck's stock, which was down €3.49, or 4.47 percent, to close at €74.64 in Frankfurt. Serono asked the Zurich stock exchange on Thursday to suspend trading in its shares, which closed Wednesday at 915 Swiss francs, or $735, following a steady decline for much of the year.
Bertarelli, a victor in the 2003 America's Cup sailing competition, has sought a buyer for Serono for much of the year.
Giants of the sector, including GlaxoSmithKline and Novartis, had considered the purchase during the past few months, but Merck - which began battling for Schering in March but ultimately lost to Bayer - was too preoccupied to focus its attention on Serono. When the major drug makers passed on Serono, Merck made its move.
"Serono was always something that we found attractive, but we questioned whether we would have really had a chance," a Merck spokeswoman, Phyllis Carter, said.
Schering would have offered Merck better distribution channels in some regions, like Asia. But Merck appears to have gotten lucky with Serono, whose stock had been sinking after failing to find a suitor.
"Serono is a second-best choice here," said Oliver Kämmerer, an analyst with WestLB in Düsseldorf. "But it's no bad second best, especially at this price."
If it is approved, the deal would create a major new competitor among biopharmaceutical companies, which blend the skills of biotechnology research with the disease-treatment expertise of drug makers. A combined Merck-Serono would compete with giants like Amgen and Roche but also companies with less focus on this field, like Sanofi-Aventis and Schering- Plough, Merck said.
"We are now at a stage where a lot of midsize companies are struggling to define themselves in the face of the enormous companies," said Alex Lewis, an analyst with the pharmaceutical consultancy Wood Mackenzie. "The future of many of them will be going into biologicals."