Merck Is Paying $US17 Billion For A Company Most People Have Never Heard Of -- Here's What It Does

Sigma aldrich clean roomAP ImagesInside a clean room at Sigma-Aldrich

German pharmaceutical and chemical giant Merck announced today that it has agreed to buy Sigma-Aldrich, a US life sciences company for $US17 billion. Merck will pay $US140 per share in cash – a 37% premium to Friday closing price of $US102.37.

This type of transaction is not a first for Sigma-Aldrich. As the name suggests, it was formed when Sigma Chemical Company and Aldrich Chemical Company merged in 1975. The combined publicly-traded company has acquired at least six other biochemical and research companies since 2001.

However, Sigma-Aldrich isn’t exactly a household name outside of St. Louis, Missouri.

In presentations given in May and June, Sigma-Aldrich detailed the scope of its operations and revenue.

Sigma-Aldrich is a chemical behemoth, and it manufacturers over 50,000 products.

Its customers know it for its various brands.

It has nearly 10,000 employees and its products are primarily used for research.

The company has many different kinds of clients, mostly schools and governments.

Merck said the acquisition will expand its global reach, especially in fast-growing Asian markets.

It's crushing the competition in using the internet to promote and sell its products.

It's quickly expanding its share of the market for in vitro diagnostics or IVDs, used to detect diseases.

Like most companies, Sigma-Aldrich's business has struggled in Europe.

Still, its sales and diluted EPS broke new records last quarter.

It recently raised its adjusted diluted EPS guidance to between $US4.32 and $US4.40.

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