German drug company Merck (TICKER:MRK) says it has agreed to buy St. Louis-based chemical firm Sigma-Aldrich Corp. for $17 billion.
Darmstadt-based Merck KGaA said Monday it is paying $140 per share in cash for all of Sigma-Aldrich's shares — a premium of 37 percent over Friday's closing price of $102.37.
Sigma-Aldrich has over 9,000 employees worldwide and supplies chemicals and laboratory equipment to government and commercial research facilities. It said its board of directors has unanimously approved the deal, which is expected to close next year, subject to regulators' approval.
Sigma-Aldrich CEO Rakesh Sachdev said the deal was a "very positive outcome" for shareholders due to the price premium and for employees, "who will benefit from enhanced opportunities as part of a larger, more global organization."
Merck said it would expand the reach of its EMD Millipore chemical and equipment division, based in Billerica, Massachusetts. "In one of the world's key industries two companies that fit perfectly together have found each other to present a much broader product offering to our global customers" in research facilities and drug manufacturing, said Merck CEO Karl-Ludwig Kley.
Merck said the combination would enable it to save 260 million euros ($340 million dollars) a year in costs within three years after closing the deal. The company said, however, that it would maintain a "significant presence" in both Billerica and St. Louis.