Germany's Merck boosts life sciences business with $11 billion bet on Bio-Techne

By Christy Santhosh, Padmanabhan Ananthan and ‌Bhanvi Satija

June 25 (Reuters) - German ​drugmaker Merck ​KGaA said on Thursday it would buy U.S. firm Bio-Techne for $11.3 billion, its biggest deal in more than a decade, betting on demand for complex drug research and manufacturing tools to ‌grow its life sciences unit.

Shares of Bio-Techne jumped 19% to $70.33 after Merck's offer of $73 ⁠per share, implying a 24% premium to Bio-Techne's close on Wednesday. Merck KGaA shares rose nearly 5%.

The deal would expand Merck's footprint in ‌areas of advanced biological research and ‌cell and gene therapy, and reinforce the life sciences business as a primary driver of the company's growth.

Bio-Techne supplies research reagents, proteins, antibodies, analytical instruments and other tools that are widely used by scientists and ​drug developers.

Some analysts said the transaction was a strategic fit and that they did not expect significant regulatory hurdles.

Merck appears to be getting an attractive asset with strong long-term potential, despite current pressures in the ⁠research tools market, Leerink analyst Puneet Souda said in a note.

LOWER VALUATIONS OPEN DOOR

"We have to look into valuations, and here of course timing ​matters," Merck KGaA CEO Kai Beckmann told reporters on a call. On a separate call with analysts, he said the valuation at which it was acquiring Bio-Techne "wasn't possible two ​years ago," when demand for drug research was at an ‌all-time high during the COVID pandemic.

The transaction marks CEO Beckmann's first major acquisition since taking over the role in May from Belén Garijo, who was known for steering several ⁠acquisitions, including Exelead and SpringWorks Therapeutics, to strengthen the company's positions in key categories.

The Bio-Techne takeover appears consistent with Garijo's strategy.

Last year, Garijo said the group has an "appetite for M&A" with a priority on life sciences and was scanning a wide ⁠pool of potential targets.

The Bio-Techne acquisition is Merck's largest deal since its $17 billion 2014 purchase of Sigma-Aldrich, which strengthened its research ​tools division.

Merck's Life Science CEO Jean-Charles Wirth said that Bio-Techne will bring scale with its catalog of consumables that include 6,000 proteins and 425,000 antibodies, making it a "big, big plus" for customers.

The deal will increase Merck's presence in high-growth areas of research ‌tools, advanced therapies and precision diagnostics, which represent a $27 billion market opportunity, Wirth said.

The German company said it would fund the deal, which is expected to close in ‌late 2026 or early 2027, through a combination of cash and debt. It had cash and cash equivalents of about ⁠2.74 billion euros ($3.11 billion), as of March 31.

Merck ‌expects to save about 140 million ​euros in costs three years after closing.

($1 = 0.8818 euros)

(Reporting by Danny Callaghan, Christy Santhosh, Padmanabhan Ananthan, Patricia Weiss in Frankfurt and Bhanvi Satija in London; Editing by Linda Pasquini and ‌Shinjini Ganguli)

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