Merck KGaA of Germany has announced details of its plan to raise just over 2 billion euros to help pay for its recent 10.6 billion euro acquisition of Switzerland’s Serono and reduce its debts.
The Darmstadt-based group is going to offer 13.28 million new shares at 78 euros each, and existing stockholders will be able to subscribe to 7.1 million shares of the new issue, at a discount from January 19’s closing price of 87.38 euros and at a rate of four new shares for every 29 they already own. The remaining 6.2 million new shares will be offered to the E Merck OHG, the holding company which represents the financial interests of the Merck family and holds a 73% stake in the group. The latter intends to place those shares and is also going to invest an additional one billion euros in return for an unspecified increased stake in Merck KGaA.
The new shares are expected to begin trading in Frankfurt on February 7 and Deutsche Bank, Citigroup and Goldman Sachs are the lead bookrunners for the transaction.
The share issue comes as no surprise as Merck had previously stated that it would embark on such a fundraising in the first quarter of 2007. The amount in the firm’s pot may also be boosted by the sale of its generic drugs business, which is valued at 4-5 billion euros and the cash generated from these two initiatives would stop any deterioration in Merck’s credit rating.