MERCK SELLS LAB SUPPLY BUSINESS | February 23, 2004 Issue - Vol. 82 Issue 8 | Chemical & Engineering News
Volume 82 Issue 8 | p. 7 | News of The Week
Issue Date: February 23, 2004

MERCK SELLS LAB SUPPLY BUSINESS

Sale frees German firm to focus on chemicals and pharmaceuticals
Department: Business
Credit: MERCK PHOTO
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Credit: MERCK PHOTO

Merck Kgaa has agreed to sell its VWR International laboratory distribution business to private equity firm Clayton, Dubilier & Rice for $1.7 billion. At the same time, Merck will combine its analytics and reagents business with its life sciences operations into a new life sciences and analytics division that will enter a long-term distribution agreement with VWR.

VWR is one of the world's largest laboratory products distribution companies, with 5,880 employees and annual sales of about $3 billion. Its 750,000 products range from test tubes to fully equipped laboratory clean rooms to biologic materials for drug development. VWR accounted for 33% of Merck's sales in 2003.

Bernhard Scheuble, Merck's CEO, says the sale of VWR "will give Merck much better margins and allow it to better focus on its core businesses of pharmaceuticals and chemicals." He adds that cash from the sale will almost eliminate Merck's debt and will allow it to invest. Scheuble says the firm will look at acquisitions in the generic drugs field and will investigate licensing opportunities to expand its prescription drug business.

The sale of West Chester, Pa.-based VWR marks the culmination of a four-year effort by Merck to exit the distribution business. Merck had announced plans for an initial public offering of most of VWR in 2000, but changed course as the IPO market fell from favor with investors. Merck began looking for a buyer for VWR in 2002.

Clayton, Dubilier & Rice primarily invests in subsidiaries or divisions of large corporations. It has acquired Wesco, the former electrical supply distribution business of Westinghouse, and Alliant Exchange, a Philip Morris food distribution business. It recently sold the Kinkos copy chain to Federal Express for $2.4 billion.

 
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