Merck KGaA (MKGAF) recently entered an agreement to acquire the microbiology unit of a German company, Biotest AG. The microbiology segment, which recorded sales of about €50 million in 2010, consists of the heipha Dr. Müller GmbH and the Hycon business. Apart from a presence in Germany, Biotest’s microbiology unit has subsidiaries in France, Japan and the United States.
The transaction is expected to close in the second half of 2011, subject to regulatory approvals in Germany and Austria.
Following the completion of the acquisition, Merck KGaA plans to integrate Biotest’s microbiology segment with Merck Millipore’s Lab Solutions business unit. The Merck Millipore segment, which is a part of the company’s Chemical Division, consists of three units – Bioscience, Lab Solutions and Process Solutions. The Lab Solutions unit supplies general laboratory applications to a variety of industries.
This acquisition will help Merck KGaA’s Millipore division to expand its product portfolio in the contamination detection segment of industrial microbiology. Biotest’s microbiology segment will add the so called “ready-to-use” culture media and instruments to the already existing Merck Millipore’s dehydrated cell culture media and testing systems. The ready-to-use culture media and instruments are primarily used in the pharmaceutical, food & beverage, and personal-care industries.
We note that, of late, Merck KGaA has been very active on the acquisition/divestiture front. The company acquired Millipore Corp. in June last year for about $7 billion in cash. We believe that the Millipore acquisition will help reduce Merck KGaA’s dependence on the pharmaceutical and liquid crystals sector and help build its specialty chemicals and performance life sciences portfolio. The Biotest deal further bolsters Merck KGaA’s Millipore business wing.
Moreover, the company divested its Crop BioScience business to Denmark based Novozymes A/S (NVZMF) for $275 million. Crop BioScience used to research, develop and commercialize technologies to improve plant health and crop yields, and was a part of Merck KGaA’s Performance Materials division.
With the divestment of the Crop BioScience business, we believe Merck KGaA will be able to fully concentrate on life sciences, as the Crop BioScience business was focused on a specific segment within the agricultural industry, which almost had no relevance to the company’s other business parts.
