MERCK KGAA TO BUY MAJORITY STAKE IN SERONO

German drugmaker Merck KGaA announced today that it has entered into an agreement with the Bertarelli family, which owns the majority stake of Serono, a Geneva-based biotech, to purchase their Serono shares. The new company will be called Merck-Serono Biopharmaceuticals.

Subject to antitrust review and closing of the purchase, Merck holds 64.5 percent of the capital of Serono and 75.5 percent of the voting rights, for which Merck agreed to pay approximately 693 euros per share in cash. Merck will make a public tender offer under Swiss law for the same price. The offer price represents a 20 percent premium to the share price as of Sept. 20 and a total equity value of approximately 10.6 billion euros on a fully diluted basis.

Through the acquisition, the companies hope to achieve: critical mass in R&D with an annual budget of approximately 1 billion euros; market-leading multiple sclerosis franchise to broaden business portfolio; and world-class biotechnology manufacturing.

The headquarters of Merck-Serono will be in Geneva, Switzerland, with U.S. headquarters in Boston. The offer is subject to the customary conditions, including the receipt of antitrust clearances and the closing of the transaction with the Bertarelli family. Full details of the conditions will be disclosed in the offer document. The transaction is expected to close in early 2007.