The Tech - Online EditionMIT's oldest and largest
newspaper & the first
newspaper published
on the web
Boston Weather: 47.0°F | A Few Clouds

Germany...s Merck Buying Swiss Pharmaceutical Maker Serono

By Carter Dougherty
THE NEW YORK TIMES


FRANKFURT, GERMANY

Merck of Germany announced Thursday that it would take control of Serono, a Swiss pharmaceutical maker, for 10.6 billion euros ($13.5 billion) after failing to secure a merger with Schering, its German competitor.

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 Roemer, Merck’s chief executive, 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 euros ($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 manufacturing the liquid crystals that go into flat-screen monitors, reported a pretax profit of 893 million euros last year on 5.9 billion euros in sales.

Bertarelli is an heir to the billionaire Swiss family that owns slightly less than two-thirds of Serono stock, which it will sell to Merck for 1,100 Swiss francs ($880) a share. Merck said that it would finance the acquisition in part through a capital increase of 2 billion to 2.5 billion euros, and that the Merck family, which controls the company, will purchase up to 1 billion euros of that new issue.

Shares of Merck declined 3.49 euros, or 4.47 percent, to 74.64 euros in Frankfurt. Serono asked the Zurich stock exchange on Thursday to suspend trading in its shares, which closed Wednesday at 915 Swiss francs.

Bertarelli, a victor in the 2003 America’s Cup sailing competition, has sought a buyer for Serono for much of the year.