Merck $17 billion acquisition of Sigma-Aldrich

Overview:

• Merck bought Sigma-Aldrich for $17 billion in the company's largest acquisition to date as it expanded its chemical and lab supplies business.    
• The German chemical and pharmaceutical company financed the deal with a mix of cash, bank loans and bond issues.
• Deutsche Bank, JP Morgan, and Societé Générale provided the bank debt. 
• The bonds included the company's first issue in the US, a five tranche $4 billion bond sold in March 2015.
• The tranches of the US issue were $1.6 billion notes with a coupon of 3.25% and a maturity of 10 years; $1 billion notes with a coupon of 2.95% and a maturity of seven years; $750 million notes with a coupon of 2.40% and a maturity of five years; $400 million notes with a coupon of 1.70% and a maturity of three years; and $250 million floating rate (0.35% spread over three month US dollar Libor rate) notes with a maturity of two years. 
• On the US issue, Clifford Chance advised Merck and the underwriters - Bank of America Merrill Lynch, Citigroup, JP Morgan, Royal Bank of Scotland, Barclays, Bayerische Landesbank, BBVA, BNP Paribas, Commerzbank, Deutsche Bank, DZ Bank, Goldman Sachs, Landesbank Baden-Württemberg, Landesbank Hessen-Thüringen, Skandinaviska Enskilda Banken, Societé Générale, and UniCredit - were represented by Freshfields Bruckhaus Deringer.
• Earlier, in December 2014, Merck issued a €1.5 billion hybrid eurobond in two tranches - €1 billion 2.625% six and half year notes and €500 million 3.375% 10 year notes.  
• Allen & Overy advised Merck on the hybrid bonds and the underwriters, advised by Freshfields Bruckhaus Deringer, were Banco Bilbao Vizcaya Argentaria, Barclays Bank, Bayerische Landesbank, BNP Paribas, Citigroup Global Markets, Commerzbank, Deutsche Bank, DZ Bank Deutsche Zentral-Genossenschaftsbank, Goldman Sachs International, JP Morgan Securities, Landesbank Baden-Württemberg, Landesbank Hessen-Thüringen, Merrill Lynch International, Skandinaviska Enskilda Banken, Société Générale, The Royal Bank of Scotland, and UniCredit Bank. 
• The final bond issue was a €2.1 billion three tranche issue in August 2015: €800 million notes with a coupon of 0.75 and a maturity of four years, €550 million notes with a coupon of 1.375% and a maturity of seven years, and €700 million floating rate (0.23% spread over the three month Euribor) notes. 
• Linklaters advised Merck on the eurobonds and the underwriters, led by Deutsche Bank and Barclays, were advised by Freshfields Bruckhaus Deringer.
• JP Morgan and Guggenheim Securities were Merck's financial advisors on the acquisition, Morgan Stanley assisted Sigma-Aldrich.

Ben Naylor - Regional Editor