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Merck KGaA considers making divisions legally separate subsidiaries
May 16, 2017 / 10:15 AM / 6 months ago

Merck KGaA considers making divisions legally separate subsidiaries

FRANKFURT (Reuters) - Germany’s Merck KGaA (MRCG.DE) is considering shifting its chemicals, healthcare and biotech supplies operations into separate subsidiaries next year to better manage its diversified businesses.

A logo of drugs and chemicals group Merck KGaA is pictured in Darmstadt, Germany January 28, 2016. REUTERS/Ralph Orlowski

The company’s enterprise resource planning system will be divided into three bespoke versions for each division, the company said on Tuesday, adding that a split into separate legal entities could be the next step in 2018.

Such moves are often seen as a prelude to possible changes in ownership, including separate stock market listings, but a company spokesman denied this is the intention.

”The rationale is a different one,“ he said. ”It’s primarily about better taking into account the specific needs of the businesses and how they are being run.

“Our portfolio has changed massively over the years, due to innovation and organic growth, but also via takeovers.”

The group, which traces its roots to a 17th-century pharmacy and is 70 percent owned by the holding company of its founder’s descendants, has pursued a diversified business model to reduce the risk of the family being heavily invested in one area.

It has built a global biotech laboratory supplies business with takeovers of Millipore and Sigma-Aldrich in 2010 and 2016, respectively.

Merck’s healthcare business includes cancer drugs, where it collaborates with Pfizer (PFE.N), fertility treatments, allergy drugs and consumer care products, while its chemicals division makes liquid crystals for TV screens, high-tech chemicals for electronics and pearlescent pigments.

Editing by David Goodman

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