Merck KGaA ‘no comment’ on generics divestment

Merck KGaA has declined to comment on a report that it is preparing to sell on its generic drugs business. Following these claims, shares in the German pharmaceutical and chemicals firm rose 2.8 per cent to 82.99 euros (56.09 pounds) at 09:12 local time in Frankfurt, Bloomberg reports.

Reports of this possible divestment were published in German daily business newspaper Handelsblatt, which cited a number of sources from the industry for this claim.

Estimates place the value of Merck’s generic drugs business to be in the region of four billion euros.

Martin Posseinke, analyst at German broker Equinet, told MarketWatch that it was “somewhat surprising” that the company was considering the sale of its generics business unit, as it was previously one of the key parts of the business.

“On the other hand,” he added, “the current price level for generics assets is quite tempting.”

MarketWatch notes that the Handelsblatt report predicts that a number of private-equity buyers could be interesting in purchasing the business unit, citing the participation of private investors in the acquisition of Altana’s pharmaceutical business unit by Nycomed.

It added that Novartis may also be interested in the acquisition, through its Sandoz unit, though noted that there would be antitrust concerns if such a transaction were to occur.

In October 2006, Merck reported a rise in sales of five per cent to 1,536 million euros.